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

Okay. Great. Welcome to the last day of the Bank of America Health Care Conference. I'm Geoff Meacham. I'm the senior biopharma analyst here at BofA. And I have Alex Hammond from my team as well. Today, we're thrilled to have Alector present to us. So we're going to be doing a Q&A here with CEO (sic) COO, Shehnaaz Suliman. Shehnaaz, if you want to just kick it off with maybe just a few minutes of prepared remarks, and then we'll get right into some questions.

Sure. Happy to do that. And I might just ask let's go on mute if you're not talking because there's some scratchy noise in the background. But thank you so much for the opportunity, Geoff. It's great to be here as we at Alector are very excited to continue to advance our immuno-neurology approach. As pioneers in immuno-neurology, which is the intersection of immunology, neuroscience and genetics, we are very proud of an advancing pipeline that is coming along very nicely with a lead program in Phase III and a pivotal trial in FTD progranulin mutation patients who are symptomatic and asymptomatic. Excited about the possibility of the progranulin franchise, an additional indication expansion, underpinned by a strong biology around progranulin and our antibody approach with AL001 as well as AL101. Behind this, we, of course, are developing immune checkpoint inhibitors, the equivalent of what you see in cancer for neurodegenerative diseases with TREM2 being a first-in-class antibody that we are in a Phase II pivotal -- sorry, Phase II Proof of Concept study in early Alzheimer's disease patients. And right behind that, we've got SIGLEC3, which is another checkpoint inhibitor being developed for neurodegenerative diseases such as Alzheimer's disease. We also have a burgeoning R&D pipeline and IO portfolio, which is part of our diversification thesis for the company. But again, I'm just very excited to be advancing this pipeline and to get into the point where we will hopefully see validation of this approach clinically. So happy to take your questions.

Let me just kick it off with kind of a higher level. There's lots of news in the Alzheimer's space this year so far, and we do have a big binary event in the adu PDUFA coming up and progress from Lilly as well. Maybe just help put Alector -- I mean, obviously, the context here is that you're not working on the same pathways that everyone else is. These are novel pathways that look at the disease and it look at Alzheimer's and dementia neuro-degeneration in a different way. Maybe it'd just be helpful to kind of compare and contrast for those listeners, and then we'll probably have some more specific pipeline questions on 001, et cetera.

Sure. Happy to do that. So the beauty of our approach is that we are really focused on microglial activation, which means that the immuno-neurological approach that we're pioneering is actually highly complementary to other approaches. Unlike -- we appreciate that there is validity to targeting all that protein, such as amyloid and tau with some encouraging data, and gene therapy approaches. However, what makes us unique is that we truly are using the brain's own immune system to activate microglial cells, which we know to be very important not only in the phagocytosis of toxic proteins, but also in a number of neuro-protective functions that we think will be very complementary to its phagocytic function, including ensuring good synaptic function and vascular and nutritional supply and the functioning of aligos and astrocytes. So I think what this means is that independent of whether something does get approved, which, of course, will be great for patients in the field, we see the opportunity for combination therapy with one of our approaches, particularly around progranulin. And I think that there's plenty of opportunity to really look for the synergy potential among these therapeutics. And ultimately, I think the Holy Grail for Alzheimer's, in particular, will be a combination therapic approach.

Thank you for that. That definitely adds a lot of color. So turning a little bit to AL001. So in terms of the clinical update, what data are you going to disclose? And how are you planning to frame the neurofilament -- microfilament data in the context of other biomarkers? So I know that's been a point out some speculation.

Yes, of course. And we don't need to speculate anymore because this will be a data-rich second half of the year for us. So at AAIC, we intend to present 6 months data from our ongoing Phase II open-label study in FTD progranulin-symptomatic patients. The data that we'll show will include both plasma and CSF biomarkers, and I'll talk about that in just a moment, as well as volumetric MRI and clinical outcome assessment data. That is the CDR-NACC-FTLD sum of boxes data that we've collected. The intent is to show the 6-month full data set for 11 patients that have been followed and then later in the year, show the 12-month full data set for the exact same cohort. Now your question about neurofilament is a really good one. What we are doing is actually identifying quite systematically a number of biomarkers that we think follow the arc of the disease. So we're looking at not just neurofilament but biomarkers that we think reflect the underlying pathophysiology and attract with the natural history of FTD. And what this means is we'll look at progranulin, certainly as we have in the past. We'll look at downstream activators of the progranulin pathway. We know that lysosomal function is extremely important as it relates to progranulin function. So we'll look at lysosomal proteins, also complement activation and inflammatory proteins that we think, again, reflect the inflammatory phase of the disease, ultimately leading to neuronal death as evidenced by neurofilament light chain. And then finally, as I said, we'll have a clinical and MRI data to look at. So our goal is really to present a composite data set that enables us to make sense of this data in totality. We know that ultimately, from a regulatory perspective, clinical data will trump the biomarker data. But certainly, it will be interesting to look at the full picture of what's going on, both at 6 and 12 months, to get a better idea of how these biomarkers, in particular, reflect the underlying disease state.

Yes, that makes sense. And then going off of what you had mentioned, so you'll be releasing 6 months and 12 months data. Do you think that's going to be long enough to see a signal or effect on MRI or CDR?

Yes. It's a good question. I mean we know from other studies in Alzheimer's disease and just in terms of the natural history of the disease that treating for longer is better. In fact, some of our thesis around the variability we saw in neurofilament has to do with durability of response. So I think that by 12 months, you should be seeing some interesting trends, perhaps, particularly on the clinical outcome assessment data. Maybe you'll see a glimpse of that at 6 months. From recently published data, we know that MRI tends not to be the best predictive surrogate marker of clinical responses. If you look at some validity data on donanemab, for example, that is quite telling. So I would say clinical outcome assessment data, you might be able to see a trend there, particularly at 12 months. With MRI, we had no variability. The way that that gets analyzed, the different brain regions and how they respond with respect to brain atrophy is more variable.

Makes sense. Moving on to the Phase III, can you speak to when enrollment will be complete? And also, what are the results you expect for the asymptomatic versus symptomatic patients? Do you expect symptomatic patients to have larger increases in PGRN compared to the asymptomatic patients?

So that's a great question. The INFRONT-3 trial is proceeding well. Just as a reminder, it's a randomized placebo-controlled trial with, as you mentioned, both symptomatic and at-risk patients. What's interesting about the at-risk group is that we actually stratified these patients by neurofilament as an entry criteria. The reason we did this is because through GENFI and other registry data, we know that a spike in neurofilament actually is predictive of when these patients convert from asymptomatic to symptomatic. And that's why those patients are included in the trial. With respect to your question about whether we expect symptomatics to have larger increases or respond better, I think it's too early to tell. We know that this is a disease in which replacing the body's endogenous supply of progranulin through our sortilin-inhibition mechanism is similar to an enzyme replacement therapeutic effect. We don't actually know what are the trigger factors that cause people to start becoming symptomatic with the disease. So it's unclear whether progranulin is a key driver of that at a certain disjuncture. So what I would say is, again, it would be helpful to look at those -- the preventative aspects of the disease as well as symptomatic patients, but we're not really, I think, expecting to see a big difference in terms of response at this point.

And just a follow-up to that. When you're thinking about the Phase III, what level of kind of commercial considerations do you have to give now? There's a lot in development for dementia. And just curious about the -- any sort of pre-commercial analysis, payer-type of analysis, assuming that you have some success in Phase III, I imagine you'll be able to hit the ground running pretty quickly.

Yes, absolutely. So I would say with the commencement of our pivotal, we began to advance our commercial planning and build out our team. Our present strategy will probably be placed more ensuring broad access as well as fair pricing amidst sort of the evolving market dynamics in neuro-degeneration. Remember that we have a portfolio. So we have AL001, which is an IV formulation, as well as AL101, which is a subcutaneous formulation. So more of pharmacy benefit product. So we will, by definition, be working to develop a more comprehensive access strategy that incorporates both those molecules. But I would say, Geoff, that we've really not started building out a dedicated access strategy team. And that market research and other commercial efforts will pick up as we get closer to launch. Now our goal is to fully enroll this trial by next year, by late next year. And so -- and then we wait for the endpoint, which is a 96-week endpoint. So we have some time to get those started.

Got you. Okay. That's helpful. And there's a lot in development. We kicked it off with the discussion on Alzheimer's. And so I wanted to ask you, what read-through would you have for 001 just proof of mechanism into the Alzheimer's? Could it help validate kind of your immuno-neurology kind of approach?

Yes. So I think, absolutely. So with 001 being our lead program and the first of many from our immuno-neurology portfolio, if that works, I would say, it really does validate the fundamental biologic approach of targeting microglia. And so we're excited about that as true proof-of-concept for our scientific approach. I think with respect to the question of read-through, there's plenty of genetics data that strongly supports why the role of, for example, TDP-43 pathology in other indications such as ALS and C9orf in FTD and also in Alzheimer's can act as risk factors for the propagation of the disease. It's difficult to say that there will be an exact correlation between the FTD progranulin outcome and those indications. But our goal is to develop this as a franchise in a stepwise fashion. So we'll go from strongest biologic thesis to kind of weaker biologic thesis, if you like, informed by data along the way. We intend to initiate a Phase II in ALS in the third quarter. So that will be very interesting and telling. So there will certainly be read-through from that into all-comers, as well as the C9orf cohort, which is currently enrolling in the Phase II, will be the gate for ungating similar core FTD trial, which will then go to an idiopathic all-comers FTD population. And then again, PD, GBA1 and Alzheimer's will be started with smaller subsets of those populations where they are genetically stratified patients that we can test in a proof of activity study.

Great. So continuing on the Alzheimer's disease thoughts. So what do you think about AL002 and the function of TREM2 later in AD pathology?

So again, we love this program, and this is probably Arnon's favorite program because TREM2 is such a well-validated biologic target and we're seeing so much in the literature now and by others. You talk about why -- the genetics for AD, of course, is incredibly strong as well as the role between TREM2 activation and its association with other risk factors such as ApoE. We also have seen some fantastic published data, Knockout models, particularly in triple Knockout showing that TREM2 has a critical role in compacting plaques through microglia mobilizations, which is very critical to prevent kind of the hyperphosphorylation of tau. Convincingly showing, I think, that TREM2 is acting in this a-beta-dependent fashion to dampen tau-mediated degeneration, so that these patients with TREM2 mutations that have both amyloid and tau pathology really should benefit from a TREM2 activation approach. So I would say that as a first-in-class antibody and furthest along, I always like to say we're first-in-class and furthest in class, we're very excited about this proof-of-concept study and what it will show. We are looking at an all-comers patient population, all the TREM2 mutation carriers as well as non-mutation carriers. The reason we're doing that, as I said, is the biology suggests that there is an approach for TREM2 activation having an effect on patients that have established the disease as well as show the disease. And so what we're going to do is essentially, retrospectively, look at these 2 cohorts to help inform the design for the Phase III. But the intent and goal is that this will be a therapeutic approach for all-comers.

Got it. And then additionally, do you think a microglia could act earlier? And if you see tau and beta amyloid, do you think it's too late to intervene?

Certainly, the conventional hypothesis around this is that intervening early is better because you don't have total brain atrophy and significant neuronal damage, and that you might actually have a shot at reactivating synapses and, at a minimum, stabilizing disease and preventing further progression. So I think our goal is to inhibit the progression of decline, and that's what the Phase III -- the Phase II, and in fact, the Phase III study, even in FTD, is filed for. I would say we think there is a role, again, with this immuno-neurology approach given microglia's intimate role in sort of rejuvenating the microglia to counteract pathological proteins, but also providing nourishment for neurons, stimulating synaptic formation and inhibiting inflammation and the neurotoxic sort of activity of astrocytes and other cells. So I think in that view, independent of how much plaque formation has occurred, you may still see a benefit here. And again, thinking forward to potential combination therapeutic approach, there is validity in continuing to test this in both early and slightly more advanced patients.

Shehnaaz, just along those lines, when you look at some of the later-stage assets more recently, they've applied imaging technology. Is that something that you guys could use down the road as Alzheimer's kind of moves down the -- move down the pipeline, tau imaging or beta amyloid imaging? Those are older biomarkers, but yes, and you have a newer mechanism, right? So...

Oh, that's absolutely true. And we're measuring all of those. I mean so our biomarkers, we're very lucky with TREM2 in that soluble TREM2 is a clearly measurable biomarker as well as CSF. And then when you look at other biomarkers of microglial activation -- like there are a number of cytokines that are secreted by microglia like Osteopontin and then receptor tyrosine kinases such as CSF1R that we know to be expressed in microglia actually near a beta plaque. So the plasma side and the CSF side of the equation, I think, is very interesting and a biomarker-rich milieu, but as is the imaging side. So we're certainly looking at tau and a beta effect tracing. And volumetric MRI, of course, will also be a part of the total evaluation.

Great. And so in the Phase II study, you're looking at TREM2 mutation carriers and non-mutation carriers. So do you think that these mutation carriers might have a more robust effect? And also, how are you powering this study to take these 2 different patient populations into account? And have you decided on biomarkers as well?

Yes. And so as I said, our goal at the moment, we haven't prospectively stratified patients by mutation versus non-mutation carriers. Obviously, everyone will be genotyped in the study. Remember that the rate of some of these mutations is pretty low. It's like 2% to 4% in the total population. So what we're going to do is actually retrospectively look at these 2 different cohorts and then look at the full body of clinical and biomarker data to make decisions about whether or not we should prospectively think about stratifying the Phase III. The Phase II at the moment, there's about 265 patients in early AD, and it's a global study. Again, I think we feel like 002 has the potential to show progression in all patients just because of this convincing ability to have a sort of a-beta-dependent effect on dampening tau phosphorylation and tau-mediated degeneration. And therefore, the goal is, again, to look at those patients and then once we have the data, to decide whether the Phase III needs to be designed differently. We are measuring CDR sum of boxes as a clinical endpoint in the study and our pilot to see a difference in CDR sum of boxes, but also all of the other biomarkers. Phase II is a typically dose-ranging study. So we have 3 doses. And our hope is that we can narrow this down to 1, and then a adequately follow a Phase III with the mutation and non-mutation cases.

Yes. Shehnaaz, I wanted to ask you on combinations, and you're totally right. I mean that's -- look, a lot of different therapeutic categories have combination approaches that maximize efficacy. At what point would you implement that in the 002 program? Is it post proof-of-concept? That's obviously going to be a very large study to try to contemplate a beta amyloid or even a tau combination and it may, in fact, be a developmental stage asset as well. So how do you kind of manage all the different ways to maximize efficacy?

It's a great question, Geoff. I think we all wait with bated breath to see what FDA does with aducanumab because I think that might be telling whether or not that becomes established as a standard of care, will influence certainly the way these pivotal trials need to be designed going forward. I would say that there's plenty of room for efficacy optimization here. When you speak with KOLs, what we typically hear is a 30% to 40% improvement in CDR sum of boxes relative to placebo is what's considered the threshold for clinical efficacy. With aducanumab, you see something like 20% in one of the trials. And so I think there's plenty of opportunity here to add on and see synergistic therapeutic effect with those. With respect to your specific question about when would we decide to do this? Well, it sort of depends on whether or not there's a new established standard of care. And I think the powering assumptions will very much be determined by what you think your effect size needs to be. Again, we're sort of aiming for that 30% to 40% cut because we believe that will be clinically meaningful to patients. And I know from my prior experience in Alzheimer's that that was certainly sort of the Holy Grail. So that's where we're going to be targeted. I think, again, it will be a step change, a game change, actually, if one pivotal trial is all that's required for approval with a post-marketing commitment. We'll wait to see how that shapes up. From our perspective, we just see this all as upside. Everybody in the field knows what the current expectation is around approvability. So if we get any opportunity to do either a single pivotal trial with a post-marketing commitment or a relief on relying solely on a clinical endpoint -- FDA continues to be very supportive. They've told us that they will look at the totality of the data, that they want us to collect at all the biomarkers so that we have the opportunity to have a conversation about what could be required for approvability. But for now, the emphasis is very much on approvability.

Great. So -- and you've spoken a little bit about this, but do you have a sense of how you're going to define the patient population?

You mean for the Phase III pivotal trial...

Yes. Exactly. Yes.

Again, it's going to be early AD. So patients that don't -- that have mild disease, not moderate. And again, they'll be stratified -- we will genotype everyone so that we have those TREM2 mutation and non-mutation carriers. The degree to which we decide to include how many mutation versus non-mutation carriers, I think, will be a function of -- will be influenced by the data we see from the Phase II trial. And then the question will be, what does the end need to look like based on what kind of effect size you will be looking for? So I think that is TBD at this point.

Got it. And so to wrap up and move on to the other -- this last program. So 003, can you speak about the biomarker data and how you're expecting target engagement for the program? That going to be released later this year?

Yes. So SIGLEC3, this is an inhibitory receptor gene expressed in microglia. It acts as a break on the immune system, slowing down microglial activity, and our goal is really to have a blocking antibody that removes the brakes and allows the immune system to work at full capacity. So a true checkpoint approach. We like the fact that we have CD33 as a key biomarker to show target engagement here. So we'll be measuring CD33 surface levels in peripheral white blood cells as well as changes in CSF soluble CD33. And that is really our best chance of demonstrating CNS target engagement. We have a validated assay for that. We can also look at some of these microglial biomarkers. So activation of microglia, like TREM2, Osteopontin and CSF-1R, which are the ones I mentioned earlier on for TREM2 are also relevant here to indicate microglial activation. So we're hoping at CTAD later this year to actually show some data from our Phase Ib with this compound, particularly as it relates to the biomarker data that I just described as well as PK/PD in both plasma and CSF.

Perfect. And so are there any correlations out there between target engagement and clinical benefit?

We're at the cusp of generating that data. So it's really hard to say at this point. There isn't enough data in the literature really to make those kinds of correlations or, in fact, associations. So we're developing that in real-time.

Got it. We'll wait with bated breath for that information. And so you've mentioned in previous presentations that your cash pipeline should get you to Q2 of next year. Has that changed? And how have you been thinking about next-stage financing?

Yes. It's a really good question. We spend a lot of time thinking about it. I would say we've been very prudent in our use of proceeds, and that's why we have what I think is a very reasonable runway until the end of Q2. We have $362 million in cash right now. We've been very disciplined in our use of proceeds so that we've get the company growth very stable and prudent with just over 200 employees. So we're doing a lot with the people that we have and the resources that we have. We will have opportunities, certainly, in the second half of this year to do a catalyst-driven financing if we feel like that's necessary, but we'll have plenty of opportunities to decide that in time. So I will say, you can just expect for us to continue to have a very thoughtful but opportunistic approach to our next financing. And of course, there's partnering and there are multiple other non-dilutive forms of financing also to consider. So more to come on that front.

And Shehnaaz, just related to that, when you think about uses of cash, are you -- is the internal pipeline churning? Or you can -- you think there are more candidates to come? Or are you more interested in looking at the field of sort of in-licensing opportunities? There's a lot going on innovation-wise in the neuroscience space.

Yes. Good question, Geoff. So we have plenty to do internally. I mean just looking at our progranulin franchise, I mentioned we're starting a Phase II in ALS. With 101, which is a subcutaneous formulation, we intend to start early proof of activity studies in AD and PD/GBA1 next year. In addition, we've got the 003 program, which will start a Phase II proof-of-concept study. And then we've got our IO portfolio, which is also moving toward IND and the clinic next year. So we do have something like 8 clinical programs in the clinic next year, which is plenty for us. We don't see the need right now to look elsewhere, and we also have a very rich research pipeline. And so we feel like we've got plenty to do and keep us occupied in-house and unlikely to look outside for our sort of innovation at this point.

And when you think about development of some of those candidates, I guess it's been controversial, right? I mean there's been obviously a very mixed kind of review of aducanumab and some people say, the KOLs we talk to say, if that is a standard going forward, it's not a good one. Others were saying it's the best that we have. Would you implement down the road a head-to-head study? Or are combinations kind of the way to go when you think about kind of the pieces that we're going to put together for Alzheimer's an effective regimen?

Yes. I mean likely to be on top of standard of care, honestly. I think it's all speculation at this point, especially, I think if it is, in fact, approved be interesting to see the scope of the label. Likely to be limited, I would guess. So again, we feel like there's plenty of opportunity to enhance immunotherapy. But fundamentally, just really fantastic to have something for patients, right, other than just hope. So I think we welcome the -- all of the efforts by FDA to get something approved, and we're excited about our future pipeline and what we can do to continue to bring both of these exceptionally high unmet needs.

Fantastic. Well, with that, we're out of time. So Shehnaaz, thanks a lot. Alex, thanks a lot for the questions. A really helpful dialogue.

Thank you very much. Very excited, and hope you enjoy the rest of the conference.

Thank you. Have a good day.

You, too. Bye-bye.