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

Okay. Good afternoon, and welcome to day 3 of the Barclays Global Healthcare Conference. My name is Carter Gould, senior biopharma analyst here at Barclays, and welcome. We are pleased to welcome Alector to next up for a virtual fireside chat. Representing the company is President and COO, Shehnaaz Suliman. Shehnaaz, welcome very much.

Thank you, Carter. It's a pleasure to be here.

I believe you're going to make some opening comments, and then we'll hop into Q&A.

Absolutely, I'll be delighted to do that. So we, at Alector, have been pioneering immuno-neurology since Arnon Rosenthal founded and CEOs started the company about 8 years ago. And what that means is really looking at the intersection of human genetics, immunology and neurology, to activate the brain's immune system or the innate immune cell microcal address neurodegeneration. We're pleased to say that we've had significant progress during this time by -- in advancing our late-stage pipeline. Most notably. Our lead stage program, AL001, is currently in a Phase III randomized placebo-controlled trial in FTD, or frontotemporal dementia patients with a progranulin mutation. That study kicked up in July and continues to enroll both asymptomatic and symptomatic FTD progranulin patients. In addition to the 001 study, the pivotal study, we also have an ongoing Phase II study that is enrolling symptomatic FTD patients and C9 off mutation carriers. And we will have Phase II data from the second half of this year. Our goal with this so turn inhibition and progranulin franchise is really to have a fast-to-market strategy in orphan indications like FTD and ALS, and then follow with the fast follow approach with the second molecule, AL-101, in broader indications like Alzheimer's disease and Parkinson's. Because genetics is at the root of what we do, our operating principle is really to do small proof of activity studies that act as the gateway to larger base to concept or in some cases like ALA one, a portal trial that can lead to rapid approval. In addition to the progranulin franchises, we are a leader in Alzheimer's disease and our second program, the TREM2 agonist program, TREM2 is a very well-validated risk gene for Alzheimer's disease. We have currently in Phase II proof-of-concept study in early Alzheimer's disease, which was also initiated earlier this year. And data from that study will be expected in a few years' time. But we are the first one with TREM2 as a target. And this is, of course, is a very exciting target in the field and well-known and validated for its many biological properties on microglial activation. Behind the TREM 2 program is a SIGLEC 3 program, which we've got data in Phase Ib in patients on. We'll show that later this year. And then we have a robust and expansive pipeline of Alzheimer's risk teams and also a burgeoning immuno-oncology portfolio behind those programs. So with that, happy to take questions. We're going to have data rich second half of this year. We're excited about the progress on the pipeline and report our conversation.

Perfect. Great. So maybe let's start with one. I think 2020, the story evolves, I guess, if you're going back to very late 2019, you had the analyst event. A lot of focus on the neurofilament data. And then we guided in the sort of second half of the year. And I think a little bit of confusion around how to interpret that. It was kind of small numbers. I think people appreciated that, but how do you sort of message that to investors? How should we think about that? Is it simply just a matter of those patients weren't treated long enough? Help us make sense of that because it clearly was a point of focus for investors?

Yes. Absolutely, and it was a point of focus for us before, during and after. So I would say, this is why we have spent some time actually really waiting for patients to enroll up to the 6-month point and 12-month point in this Phase II study. And the data that you'll be seeing in the second half of this year will really fall into 2 buckets. The 6-month data will include I would say, a tsunami of biomarker data, not just neurofilament, but markers of target engagement, lysosomal function, inflammation and neurodegeneration, and that will be accompanied by volumetric MRI data and the clinical outcome, which is the CDR NACC FTLD sum of boxes and a full 6-month data set for 11 patients that have been followed in that Phase II study. Similarly, later on in the year, we will have 12 months data for the same cohort. So now we have an opportunity really to prespecify the biomarkers of interest and understand how they are tracking. With respect to the underlying pathophysiology of FTD. This is something we hope to be more intentional about. And I think we'll provide a more robust picture of exactly what is happening with the underlying disease and its natural history. So you're right in the sense that neurofilament will be a part of the data that we show, but I think the focus. We'll be much more on the totality of this data on a composite data set and accompanied by volumetric MRI and clinical data, which, of course, is important.

And clearly so we have to wait for the data, but as you think around the time needed to treat to start to tease out those benefits on volumetric MRI or on CDR sum of boxes, how are you thinking about that even if it's at a high level?

Yes. It's a good point that you're raising or alluding to. I mean, it is an open-label study. So there is the caveat that but I'll get to that in just a moment about how to interpret this signal, if any, that one could hope to see. And you are right that if we look at longitudinal data, typically, it does take longer. I would say the 12-month point is a more, I think, viable time point at which to hope to see a change in particularly MRI and maybe even the CDR sum of boxes, which also takes a long time, but what we are doing to contextualize this data, Carter, is we're looking at a natural history cohort that has been matched by disease severity and neurofilament, and we're going to show you sort of how that cohort is tracking relatively to our own. And that will give us the opportunity to at least interpret the data and contextualize it for treated versus untreated patients, and we're hoping that by doing that, it perhaps provides an opportunity to interpret this data better.

Okay. And as we -- I mean clearly, you've -- so that's going on, you clearly are already enrolling the Phase III. Should we think about those data sets in any way influencing or leading to modifications of the Phase III or I guess the dye has been cast on that front. How should we think about that?

Yes. It's a big question and a good one. I would say that these are primarily validating data at this point because our decision to go into Phase III was based on traffic engagement, which we sold very compellingly in both plasma and CSF and so I think it's unlikely to dramatically alter the design of the Phase III, but there may be elements which would sort of cause us to measure more or fewer or more biomarkers, for example, there may be incremental enhancements that could come.

Okay. That's helpful color. And as we think about the Phase III, having kind of started last year and potential impacts from COVID, how are you thinking about that now? Have you -- has there, I guess, what steps did you take into, maybe make that a little bit more amenable and easier for these patients to participate?

Yes. Good question. We've been fortunate because we started enrolling in July when I'd say the peak of the COVID impact we have sort of assessed and put in place risk mitigation procedures to enable us to proceed according to timeline. Some of those include at home administration of drug, doing remote assessments of particularly safety assessments, harder to do an efficacy assessment, but the ones that we could do looking at sort of activating sites globally, which was part of our plan anyway, but just accelerating sites in regions that have actually come back online post COVID, and we're doing better. And I think we anti on our patient engagement and advocacy efforts as well as direct-to-patient recruiting efforts. So we have done a fair amount with respect to enhancement of the trial. And doesn't happen, I think, would have happened independent of COVID. So this has just given us an opportunity to catalyze and streamline. And so we're feeling pretty good about how enrollment is going. We are right on track. There is nothing available to these patients. We are in Phase III. Many of the earlier gene therapy and other efforts are starting to get Phase I safety data. So patients are really eager and willing to participate in a trial.

Okay. And then when we think about AL-101, can you just kind of remind us how to think about clearly, you're going after different populations, but when we think about the differentiation between these assets and some of the characteristics of the profile. Can you just remind us on how to think through that piece of puzzle?

Certainly. So AL-101 is primarily designed to be a subcutaneous formulation that could be used in broader indications to facilitate better access to patients, convenience and commercial tractability. And the PK/PD data that we're evaluating right now gives us confidence that, that will, in fact, be true. So at a minimum, it is a life cycle option, which could be available to extend the viability of this franchise and really enable us to diversify into larger indications perhaps sooner than may otherwise might have. There are also some potency and other benefits that we'll talk about when we release this data, but I think by and large, the bottom line is that it's a very viable, either life cycle molecule or alternative that I think will help us, again, move forward with a franchise strategy around the target.

Had an e-mail question that came in regarding your comments on the natural disease cohort. In the past, we got -- I think there was a pretty good literature data, at least on the how volumetric MRI might evolve with time. So is this really more focused around sort of understanding how CDR sum of boxes might change these patients? Just -- I think the question is trying to get at just, I guess, a further delineation of exactly what this natural disease cohort is trying to accomplish?

Yes. So the short answer is yes. It is focused on CBR sum of boxes and in part because we have had proprietary access to the patient-level data from the GNP registry. These registries are out there, and there have been several publications now in neurology. I mean, over time, Johnson Sweeten, and they have done a good job of the PRs publishing the sort of cross-sectional and longitudinal data, but because we've been cultivating these relationships and have been collaborating closely with the registries, we actually have had access to patient level data. And that's what we'll show to build this age-matched group of patients to compare and contrast against with our data, but it's also importantly, the data set that we used to model the rate of disease progression to improve our powering assumptions in Phase III.

Okay. And maybe coming back to the Phase III for 001, how have you now been guiding to investors on how long you think that study will take to enroll?

We have not as yet and partially because we want to get a steady state on our enrollment and assumptions. I think we, as I said, we are tracking according to plan. We've activated something like 40-plus sites globally, 50 is the target. So all of that is going really well. We're just waiting to get to the other side of COVID so that we can have a better assessment of steady state.

Understood. I do want to touch on 002 and 003, but first, I wanted to touch on sort of the oncology effort because I think when we got the press release late last year, a lot of people were surprised, whether they should have been or not, it did, I think, a couple of people by surprise, just given how much of the focus was on neurology. And so can you maybe just talk for a second around this first program here going after CD47 and thoughts on differentiation relative to some of the other efforts that are further along. We've seen some M&A in the space as well, but just how we should think about your program relative to some of those?

Yes. So the way we thought about our oncology programs have been really that -- these are for the most part very possible pleiotropic targets that have not just static validation and biological rationale in immuno-oncology but also immuno-neurology. So that's sort of the basis of our sort of discovery approach. I would say on the AL-008 program and 009 programs, one is a multicyclical pancyclic inhibitor that we think will have a best-in-class profile because of limited side effect ability to activate downstream pathways. And the other one is an Sigma activator as well as a narrow cyclic inhibitors. So I think removing the brakes while pressing on the gas at the same time, if you think about sort of an analogy. And our goal here is really -- this is part of our diversification strategy as a company to enable us to develop best-in-class assets across a few therapeutic areas. Again, with the underlying sort of therapeutic rationale could have interest in both immuno-oncology and immuno-neurology. Our deal with Innovent really allows us to enable them to do the heavy lift on filing an IND in China and then to be able to leverage that data set to accelerate our efforts in the U.S. and that is how we sort of strategically think about it. Our goal is very much to get to proof of activity sooner rather than later, and we're about 12 to 18 months from filing an IND on both from -- in both of these programs. And I would say that's going according to plan. So I think we'll have to wait and see how the data -- how they advance until these molecules move, but we're very happy with the progress to date.

Okay. Great. Maybe moving to 002, you've moved this into you and your partners have moved this into Phase II here. I guess, so a lot of focus on Alzheimer's, particularly nowadays, but I guess when we think about establishing some proof of concept. What should we think here about sort of the time line to data and what you'd like to see? What would be encouraging to see out of this Phase II, given that this is a target we haven't really seen other people prosecute meaningfully in the clinic today?

Yes. I think that's a big statement. However, I think there's a lot of target validation and biologic rationale to support the role of TREM2 as a key risk factor in Alzheimer's and in fact a lot of in vivo data to support its role on in microglial activation. Every week, it feels like there is a new publication that really supports the underlying hypothesis. The difference with our molecule is that we have actually had a bit of target engagement data. We showed a decrease in soluble TREM2 to from our Phase Ib patients, which form the basis for us to accelerate into the Phase II. It's a well powered Phase II randomized placebo controlled trial in 265 patients that have early AD across 3 doses. So we're doing dose-ranging and also looking for evidence of those target engagement as well as the CDR sum of boxes as the endpoint. So I would say that the study is really very adequately sort of designed to look at everything you would expect, volumetric MRI, a clinical endpoint and plenty of biomarker data, both around TREM2 and microbial activation and downstream pathways. We just started enrolling that study in January. So again, too soon to tell but again, we are completely tracking with enrollment the Alzheimer's patients who we are recruiting are very motivated. I think for those that follow the field, it's an incredibly viable target, and we control and own 50% of the commercial rights and right now are actually running the study. And so we're very excited about the progress we're making. I think it's a little too soon to actually guide to data at this point.

And I don't think -- I guess, when you think then about how TREM2 overlaps with potential to, I guess, a presence in these patients. How do you think about that? And I guess what I'm trying to get at is how you think about defining a patient population going forward from a clinical development perspective? And if there are considerations or nuances we should kind of keep in mind as we think about the program moving forward?

Yes, it's a great question. I think we think the deficiency in TREM2 to exacerbate both amyloid and tau pathology. And it actually makes a lot of sense to treat patients [Audio Gap] we get to the end. So there is that opportunity to kind of look at it and look at with a stratification in Phase III may or may not make sense. But at this point, we really are looking for a signal. So a potential signal and that has been the emphasis for kind of the way the Phase II and biomarkers, of course. The way that the Phase II has been designed.

Just given that you're very -- very much in the neurogenerative space. And clearly, a lot of other things going on across Alzheimer's, I guess to what extent does that, I guess, how does that impact -- I guess, are you -- do you see any impact in -- as you think about engaging with regulators or accelerate the paths for. I mean, clearly, you've defined paths for each of these programs, but it does feel like we're on the precipice of a pretty big pivot one way or another as we think about at least Alzheimer's in the very near future. And I don't know if you see any sort of ramifications or implications for your own agents?

Well, I mean, we think what's happening with speculators is a very positive development and would be great for patients regardless of what it means for everyone working in the field and we really welcome that because our approach is different. It's really about microbial activation independent of what -- whether or not an anti [indiscernible] amyloid approach is likely to work. We actually think -- there's nothing but upside from the point of view of a faster market, faster to market strategy. But from a point of view of what that means with respect to a therapeutic that is a microbial activator versus one that is more downstream. We think there's going to be plenty of opportunity for both therapeutics. And I think many people think a combination strategy is a viable strategy ultimately anyway. So there's no doubt that we'll all benefit from any potential upside that comes from more engagement with regulators, but I don't know that we think that there is any downside really at this point.

Okay. And then I guess just with this last moment or 2 we have left, again, I think it would be helpful to just kind of help orient people as we think about data readout and catalysts. It sounds like you're orienting people to the second half of next year, but maybe just to summarize maybe just your view?

Yes. Of course, would be happy to. Certainly. So I mean there's AAIC and CTC, which are 2 of the major conferences in the field in the second half of this year. And the AL-001 data, we have submitted abstracts for the 6- and 12-month time points, as I said. And this way of confirmation of acceptance, we will let everyone know. But certainly, we are planning for those 2 contractors. And then on AL-101, as I said, the subcu formulation, we will have PK/PD data that will also show to investors. That may be a press release, not a specific conference event, but we'll look for the right venue. And then finally, the AL-003 target engagement data from 12 patients in the Alzheimer's disease -- with Alzheimer's disease; that data will also be released in the second half of ideally at one of those conferences, but if not, then through a KOL event or a press release. So those are the, I think, 4 data sets to look forward to, it should be a very exciting second half.

We absolutely agree and looking forward to all the progress. Shehnaaz, thank you very much for your time today. I really appreciate you coming on and meeting with us.

Certainly. Thank you. It's a pleasure.