Alector, Inc. (ALEC) Earnings Call Transcript & Summary

All right. So good morning, everyone. Thank you for joining Citi's 15th Annual Biopharma Conference. I'm Neena Bitritto-Garg. I'm one of the Smid cap biotech analyst here at Citi. For our fireside chat, I'm pleased to be joined by the team from Alector. I have with me today Shehnaaz Suliman, President and COO; Robert Paul, Chief Medical Officer; and Sabah Oney, Chief Business Officer. So just to start off, Shehnaaz, if you want to talk a little bit about just kind of the concept of neuroimmunology and how it's differentiated from some of the previous approaches that have been taken in neurodegenerative diseases, that would be great.

Thank you, Neena, and it's great to be with everyone today. We're pioneering a completely new approach to treating brain disorders, which we call immuno-neurology, which integrates immunology and neuroscience and genetics to develop therapeutics that improve the brain's immune system to fight neuro-degeneration. Much like the field of cancer immunotherapy, which was transformed by the development of immune checkpoint inhibitors and an increased understanding of cancer immune biology. In immuno-neurology, we hope to transform the treatment of neurodegenerative diseases by identifying brain immune checkpoints as therapeutic targets and that activate the brain's immune system to fight neurodegeneration. We know from human genetics that the vast majority of risk genes for neurodegenerative diseases like Alzheimer's are, in fact, immune checkpoints that are associated with microglia, which is the brain's primary innate immune cell. And so our therapeutic strategy is really directed at targeting these risk genes in order to enhance the actions of microglia, which we now know to be really important to maintaining bone -- brain homeostasis and many other functions of immune surveillance. And so the way to think about Alector at this point is really a company that is developing a broad portfolio of very relevant immuno-neurology targets that are really focused on activating microglia and the brain's immune system to address neurodegeneration.

Great. Now, that was a great introduction. So now I want to talk about some of the specific assets. So of course, AL001 is your lead asset, just entered the Phase III study for frontotemporal dementia patients with mutations in the granulin gene. So let's kind of take a step back and just talk about the mechanism of action. The -- and also just kind of the importance of when you think about increasing progranulin levels, thinking about intracellular versus extracellular levels, just because that is a question that we get from investors.

Absolutely. So our lead asset, 001, is a sortilin inhibitor. And I'll describe why that's relevant in just a moment. Going back a step, we know from human genetics that progranulin is a critical factor for brain homeostasis, and it is, in fact, a key regulator of immune activity in the brain. And it's got genetic links to multiple neurodegenerative diseases, including frontotemporal dementia. From the genetics, we know that patients that have a homozygous form of this, with the complete loss of function, develop a very severe form of dementia in their early adulthood and they die very young. But due to ApoE insufficiency, patients who have the heterozygous point, which is the form we're targeting, have one good and one bad copy. And because of that, their progranulin levels are substantially diminished. And so the goal of our therapeutic strategy is to really upregulate progranulin levels to physiologically normal levels to restore endogenous supply of progranulin. Now the way that we do that with 001 is we target a degradation receptor called sortilin. Sortilin is one of many proteins that is responsible for actually trafficking progranulin to the lysosome. We know that lysosomal function is extremely important in a number of neurodegenerative diseases. When it -- when the dysfunction occurs, we see the onset of dementia. And so what's really great about our approach is that through targeting the degradation receptor, we're able to basically stimulate the endogenous supply of progranulin and know that we're able to affect both intracellular and extracellular levels. Now you asked an interesting question about perhaps the biologic relevance of targeting progranulin and sortilin specifically. What we know is that there are a number of other chaperone proteins that are actually responsible for the biologic function of progranulin in an independent, sort of an independent manner. And so when you look at the phenotypes of patients with sortilin, there is actually no deleterious effect. But when you look at the sort of knockout phenotype of these other proteins, you see that there is a deleterious effect on lysosomal function. So what this tells us is that we're able to effect -- we're able to inhibit sortilin, but at the same time, because of these other chaperone proteins, still enable a very functional ability for progranulin to traffic to the lysosomes. And so this has sort of played itself out in both our Phase I and Phase II data, where we actually have an incredibly safe profile, and we see no deleterious side effects with upregulating the endogenous supply of progranulin to normal levels.

Great. So now, as you mentioned, right, we've seen some Phase I data and some preliminary Phase II data from AL001 in FTD patients. So could you just talk a little bit about one of the key biomarkers that we've looked at is neurofilament light chain. So could you just talk a little bit about neurofilament light chain, what it is, how it progresses over the course of FTD? And just any information that you can help share on how long it could take to kind of see a difference in a clinical study? That's obviously the key question that everyone is asking, so.

Yes, and it's a totally fair question. I think neurofilament has become a very relevant biomarker because people see it as a distal biomarker that is representative of neuronal and axonal degeneration. I think the way we prefer to frame our biomarker data is that while neurofilament is important, it really is the totality of the biomarker data that we are seeing that is going to provide a more complete picture of what's going on. Our goal here is really to be able to associate, and where possible, correlate the tracking of these biomarkers with disease progression. And what that, in effect, means is that we need to look at neuro-inflammation, lysosomal function, as well as neuronal degeneration as really kind of key biomarkers, if you like, that tell us about the therapeutic effect of AL001 on the treatment of these patients. And so in -- at the AAIC presentation, while we discussed neurofilament, and we showed a 14% reduction from our Phase Ib early data. However, at AAIC, we also showed an impact on several other disease-relevant biomarkers like Osteopontin as a measure of neuroinflammation and Th1, and Clofexan as a key measure of lysosomal function, in addition to the effects we showed on neurofilament in patients at various time points. And what we'd like to say about that is it's really the totality of this data and the trends that we observe on different kind of aspects of neurobiology, which we find to be the most encouraging. The other thing I'd say about neurofilament is that we know from the registry data that it can take quite a while in order for neurofilament levels to stabilize. We also know from treatments with ofatumumab and SPINRAZA in MS that it could take up to 6, 12, sometimes 18 months for neurofilaments to actually plateau, to stabilize and to see a decrease, which is consistent over time. And this is the reason why. What we'd really like to do is develop a composite data set and to look at durability of response. And so maybe that's a long way of answering your question that we -- while we think neurofilament is indeed a very relevant biomarker, we also think that durability of response and looking at it in the context of our overall biomarker profiles is important.

Absolutely. That makes sense. So just thinking about the durability of effect, I know you're going to be planning an update, a data update once all of the patients have essentially completed 6 months of dosing. So could you just talk a little bit about what we should expect to see there? What biomarkers can we get MRI data, clinical end points? And also which patients, right? Because there is a question about there were a few patients who missed doses due to COVID-19 in the AAIC data set. So how those patients might be treated in the 6-month data as well?

Certainly. So I would say, right now, we're -- really are totally focused on executing the Phase II as well as our Phase III, which we're very excited about having initiated, despite COVID. But with COVID, what we really want to ensure is that we have a meaningful number of patients with significant treatment duration at a minimum 6-months when we disclose this data. And we will know more specifically about the timing, I would say, early next year. And so our goal is really to update investors in the, I would call it, the January time frame about specifically when we're going to have a full data set. Neena, you alluded to the fact that perhaps a complete data set would be more relevant and interesting than a partial data set. And so what we hope to do when we show and disclose the 6-month data is to show 6-month data for all of the patients that we have that have both CSF and plasma biomarkers, volumetric MRI as well as clinical outcomes. And so the goal is really to have a significant number of patients, the majority of patients that have rolled over from the Phase I and have completed the 6-month assessment with all of those biomarker clinical outcome endpoints and then disclose the data at that point in time. So while I won't be able to give a specific update around the timing. What we can say is that by early next year in the January time frame, we should have great visibility on how many patients and when we intend to disclose that ideally at a scientific forum, and we can provide an update then.

Great. So will that update include also patients with C9orf72 mutations? Or will that be mostly focused on just the GRN mutation patients?

Yes. So we are continuing to enroll the C9orf cohort as well as asymptomatic patients in the Phase II. And again, what we're trying to optimize for is completeness of the data set, integrity of the data set and durability of response. So as soon as we have that, we are totally -- we are going to be totally open about disclosing that data. I think what we learned from AAIC, where we were incredibly transparent about our data, individual patient data points that there is some variability here. And because we're measuring neurofilament, as often as we are, that durability -- that variability doesn't always necessarily provide a clear enough picture of what's going on. And so our learning from that is really to just give the data an opportunity to show itself. And to do that, what we need is to treat these patients for as long as we can and to get the composite data set to be available.

Okay. Great. And I just want to confirm. I just got a question from an investor, just to confirm that we probably won't get an update at CTAD. It sounds like it is going to be a 2021 update, right?

Yes. I think that's fair. So I would -- we're not planning to have an R&D Day in December. I think we were hopeful that we might be able to do that. But in retrospect, I think -- and again, this just came out of the learnings of presenting an incomplete data set that wasn't really able to tell us definitively what's going on with neurofilament. Our plan is really to just wait until we have, again, a sufficient number of patients that have enrolled with a full and complete data set, and we can guide early next year in January as to the specific timing of when we will disclose that.

Okay. Great. So of course, we've seen data now from the symptomatic GRN patients. But obviously, you mentioned that you are still enrolling asymptomatic and C9orf72 mutation patients. So I guess, could you just talk a little bit about what we could expect to see in those patients? I think just given that different mutation, of course, with c9orf72 patients, and then with the presymptomatic patients, if their NfL levels and the MRI look very similar to a healthy individual, I guess, what could we expect in those patient populations?

And I think the best indicator for what we could expect to see comes from the GENFI and all FTD registries. If you look at the trends for neurofilament in the C9orf and presymptomatic cohorts, what we saw very clearly from the GENFI data that was published in December, is that first and foremost, there is a spike in neurofilament in patients that are about to convert. And that spike is really predictive of patients that will move from presymptomatic to symptomatic. The second thing that we saw is that the c9orf neurofilament levels tended to trend similarly to the progranulin patient cohort, but perhaps not with the same degree of effect. So I would say conceptually, the C9orf patients, because of the underlying pathology which is very similar to the progranulin mutations, should be trending similarly to the FTD progranulin cohort. Again, our plan with this Phase II was to gather as much information as possible longitudinally. And so we will have that data from the c9orf cohort. We're, in fact, planning to add even more C9orf patients to the enrollment of this Phase II to be able to say with greater confidence what we expect. And that data should be available sometime next year as well.

Excellent. So, and you mentioned, right, we just started a Phase III study with 001. So I guess, could you just walk us through kind of the design of that study? And specifically around kind of the presymptomatic FTD GRN cohort, how should we think about the inclusion criteria for that population and the likelihood that they are going to convert over a reasonably short period of time to symptomatic disease?

Maybe I'll start and then Robert, you can fill in the gaps on this one. But it is, as you would expect, a randomized placebo-controlled trial in which we are looking at both presymptomatic and symptomatic patients. And the goal here is to really be able to see -- be able to impact disease progression on patients that are likely to convert. From what I just said about the registry data and what we know about these patients, there are some cut points in neurofilament that are likely to stratify patients that will convert perhaps sooner rather than later. And so what we've tried to do in the study is to really the final cut point that we hope we'll select for early converters. At the same time, the symptomatic cohort will reflect patients with kind of mild to moderate disease that are also on the spectrum of progressing so that we're able to, in fact, have a chance at impacting disease decline. I'll stop there and let Robert fill in the gaps.

Yes, and I just want to add that based on our experience with Alzheimer trials where they started mild-to-moderate and then mild and then basically then when all the -- or most of these studies failed and went into prevention part, we actually want to have an approach now where we can actually test this in one study. I think that's the elegant way to do this. And as Shehnaaz mentioned, there is neurofilament. We know from the registries if they have neurofilament levels in the plasma, but for a certain level that they have a high likelihood that they actually developed symptoms over time. The asymptomatic patients will be actually on the trial longer than the symptomatic, but this is really a design where you can -- it has a prevention component, but also a treatment component in the symptomatic patients. And we have patients that are very mildly affected, but also more advanced. So this gives us an opportunity basically to study FTD across basically the whole spectrum of disease stages.

Great. Could you talk a little bit about just kind of the design at a high level, kind of looking at the primary endpoint of CDR, CDR Sum of Boxes, NACC FTLD is the primary endpoint, but just thinking about kind of the basing design and what would be needed to consider the study a success based on the basing criteria, if you could talk a little bit about that, too?

So basically, we have 2 dose arms. So we have one active, one placebo arm. We -- the CDR FTLD is like a variation of the CDR-SOB that's used in Alzheimer disease. But since the clinical phenotype is different in FTD. So people have language problems also have behavioral changes, which is not covered necessarily in the classic CDR-SOB. So these 2 domains were actually added to make it more sensitive for -- or specific for FTD. And it's widely used in a lot of registries. It had also been used in some of the clinical trials. And actually, we went to the FDA and they agreed that this is the primary endpoint or primary assessment for the Phase III. So the way we -- actually how we analyze, we have not disclosed this yet because this is a very new design. And I think we don't basically want to provide too much information. But we work with many biostats people, and I think that's, again, what I said, the beauty of the design is that you -- we combine basically a prevention trial and we can see -- we can explore treatment effects across the whole spectrum of disease stages. And I think that's unique here.

Great. So I might come back to AL001 at the end if there's time, but I do want to touch on the rest of the pipeline for a few minutes. So you're also advancing AL101, which is also looking at progranulin. So I guess, could you just talk a little bit about the differentiation between 001 and 101?

Sure. Be happy to do that. And I'd say the framing for the discussion around 001 and 101 is really to think about this as a progranulin-franchise strategy. The goal here is to maximize the impact of each of these molecules across indications. We know that progranulin has a central role in neurodegeneration and that modulating it as therapeutic potential across a broad range of neurodegenetive diseases. So our goal really with 101 is to have a molecule with a different PK/PD profile that allows us to fine-tune the modulation of progranulin in diseases such as Parkinson's and Alzheimer's disease. And so the differentiation really is more around PK/PD than anything else. And hopefully, that will enable us to have a different formulation that we can then take forward into multiple broader indications in which progranulin biology is equally relevant.

Okay. Great. And when could we -- I know you're running a healthy volunteer study now. So I guess, when can we see that data? And what should -- what sort of biomarker. I mean, I'm sure it's just going to be PK/PD mostly, but what should we look out for in those data?

Exactly. So that data -- that study is enrolling. And again, in the next 12 months, and I think it will be on the earlier side of 12, we hope to show, again, all of the relevant disease biomarkers, progranulin levels, as evidence of target engagement and then, of course, PK/PD. So I think that's really what you can expect. It should look very similar mechanistically to 001, but the PK/PD differentiation will be evident.

Great. So now I want to move on to the Alzheimer's programs. So right now, you have two clinical stage Alzheimer's programs, 002 and 003. Both of which are partnered with -- or that you have a collaboration with AbbVie. I guess to start off, could you just talk a little bit about the collaboration with AbbVie, kind of the terms and any kind of upcoming decision points they might have on either of those programs before we get into the details of the programs.

Definitely, I'm going to let Sabah take this one.

Yes, absolutely. We signed a collaboration agreement with AbbVie in 2017 and under the terms of that agreement, we're still moving forward with our partnership. And actually, we're very pleased with how the partnership is moving forward. In terms of the overall terms, there was $225 million upfront for the part of the agreement, and there are additional $1 billion in development milestones for these two programs. And on the back end, these programs are partnered on a 50-50 global profit cost share. In terms of the structure, Alector is responsible for the Phase I and Phase II studies. And AL002 program is moving into Phase II and AL003 program currently is advancing in Phase I. And at the end of this Phase II trial, which we call proof of concept, we has an option to opt in into these programs either together or separately. And at that point, there will be about $250 million milestone payment that will turn this collaboration into a Phase III program that is shared 50-50 amongst the companies. And we've been working very collaboratively with our colleagues at AbbVie and their commitment to neuroscience and neurodegeneration is pretty evident for us. So we're pretty excited to move the 002 program into Phase III and continue with 003 program. And looking forward to gathering data from those, and I'll hand it over to Shehnaaz to give you more color to those programs.