Alector Inc

Previous wording

Latozinemab is currently being studied in a global pivotal Phase 3 trial, INFRONT-3, for the potential treatment of adults at risk for or with symptomatic FTD due to mutation in the progranulin gene (FTD-GRN). In 2023, we and GSK held a Type C meeting with the U.S. Food and Drug Administration (FDA) and received scientific advice from the European Medicines Agency (EMA) regarding the pivotal INFRONT-3 Phase 3 clinical trial of latozinemab in participants with frontotemporal dementia due to FTD-GRN. We and GSK aligned with the FDA and EMA to conduct the primary analysis on symptomatic participants in INFRONT-3. The companies performed a sample size re-estimation that supported enrollment of approximately 90-100 symptomatic participants for a treatment duration of 96 weeks. In October 2023, we achieved target enrollment in INFRONT-3 with 103 symptomatic and 16 at-risk participants enrolled. Target enrollment was based on feedback from the FDA and EMA. Enrollment completion is subject to revised protocol approval in countries outside the United States. In February 2024, the FDA granted Breakthrough Therapy Designation to latozinemab for the treatment of FTD-GRN. The FDA's Breakthrough Therapy Designation is granted to expedite the development and review of drugs in the United States that are intended to treat a serious condition, when preliminary clinical evidence indicates the drug or vaccine may demonstrate substantial improvement over available therapy on clinically significant endpoint(s). In our INFRONT-2 open label Phase 2 clinical trial in FTD-GRN patients, latozinemab elevated progranulin levels to the normal range, biomarkers of disease activity showed trends toward normalization, and preliminary data showed that latozinemab slowed disease progression compared to historical matched controls. Latozinemab has been generally well tolerated in healthy volunteers and FTD-GRN and FTD-C9orf72 patients in our Phase 1a and Phase 1b clinical trials, and in our open label Phase 2 clinical trial. Patients who previously participated in the INFRONT-2 or INFRONT-3 trials have the opportunity to participate in a single continuation study, enrolling in the United States and other countries, which will provide continued access to and assess the continuing safety of latozinemab.

Current wording

Latozinemab is currently being studied in a global pivotal Phase 3 trial, INFRONT-3, for the potential treatment of adults at risk for or with symptomatic FTD due to mutation in the progranulin gene (FTD-GRN). In October 2023, we achieved target enrollment in INFRONT-3 with 103 symptomatic and 16 at-risk participants enrolled. Target enrollment was based on feedback from the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA). Enrollment completion is subject to revised protocol approval in countries outside the United States. In February 2024, the FDA granted Breakthrough Therapy Designation to latozinemab for the treatment of FTD-GRN. The FDA's Breakthrough Therapy Designation is granted to expedite the development and review of drugs in the United States that are intended to treat a serious condition, when preliminary clinical evidence indicates the drug or vaccine may demonstrate substantial improvement over available therapy on clinically significant endpoint(s). In our INFRONT-2 open label Phase 2 clinical trial in FTD-GRN patients, latozinemab elevated progranulin levels to the normal range, biomarkers of disease activity showed trends toward normalization, and preliminary data showed that latozinemab slowed disease progression compared to historical matched controls. Latozinemab has been generally well tolerated in healthy volunteers and FTD-GRN and FTD-C9orf72 patients in our Phase 1a and Phase 1b clinical trials, and in our open label Phase 2 clinical trial. Patients who previously participated in the INFRONT-2 or INFRONT-3 trials have the opportunity to participate in a single continuation study, enrolling in the United States and other countries, which will provide continued access to and assess the continuing safety of latozinemab.

Previous wording

To date, we have not had any products approved for sale and have not generated any revenue from product sales. Further, we do not expect to generate revenue from product sales until such time, if ever, that we are able to successfully complete the development and obtain marketing approval for one of our product candidates. We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. We have incurred net losses in each year since inception, and we expect to continue to incur net losses for the foreseeable future. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. Our net losses were $36.1 million and $45.9 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $746.2 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Current wording

To date, we have not had any products approved for sale and have not generated any revenue from product sales. Further, we do not expect to generate revenue from product sales until such time, if ever, that we are able to successfully complete the development and obtain marketing approval for one of our product candidates. We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. We have incurred net losses in each year since inception, and we expect to continue to incur net losses for the foreseeable future. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. Our net losses were $38.7 million and $74.8 million for the three and six months ended June 30, 2024, respectively. Our net income was $1.4 million for the three months ended June 30, 2023 and net loss was $44.5 million for the six months ended June 30, 2023. As of June 30, 2024, we had an accumulated deficit of $784.8 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Previous wording

require the manufacture of drug supply for our preclinical studies and clinical trials; and

Current wording

require the manufacture of drug supply for our preclinical studies and clinical trials;

Previous wording

In January 2024, we announced the closing of an underwritten public offering and the net proceeds from the offering were approximately $71.1 million. Our cash, cash equivalents and marketable securities as of March 31, 2024 totaled $562.1 million, which we anticipate provides runway through 2026.

Current wording

In January 2024, we announced the closing of an underwritten public offering and the net proceeds from the offering were approximately $71.1 million. Our cash, cash equivalents, and marketable securities as of June 30, 2024 totaled $503.3 million, which we anticipate provides runway through 2026.

Previous wording

We expect that our revenue for the next several years will be derived primarily from the AbbVie and GSK Agreements. The balance of deferred revenue was $277.9 million as of March 31, 2024, related to the AbbVie and GSK Agreements. The deferred revenue is expected to be recognized over the research and development period of the programs through proof-of-concept for AL002 and the completion of the initial Phase 2 clinical trials for specified indications for latozinemab and AL101.

Current wording

We expect that our revenue for the next several years will be derived primarily from the AbbVie and GSK Agreements. The balance of deferred revenue was $263.5 million as of June 30, 2024, related to the AbbVie and GSK Agreements. The deferred revenue is expected to be recognized over the research and development period of the programs through proof-of-concept for AL002 and the completion of the initial Phase 2 clinical trials for specified indications for latozinemab and AL101.

Previous wording

Collaboration revenue was $15.9 million for the three months ended March 31, 2024, compared to $16.5 million for the three months ended March 31, 2023. The $0.7 million decrease was mainly due to a decrease in collaboration revenue recognized for the latozinemab program. Revenues are recognized as the program costs are incurred by measuring actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation.

Current wording

Collaboration revenue was $15.1 million for the three months ended June 30, 2024, compared to $56.2 million for the three months ended June 30, 2023. The $41.1 million decrease was mainly due to a $35.7 million decrease in revenue recognized for the AL101 programs, including a cumulative non-cash revenue adjustment due to a contract modification in the second quarter of 2023 to have GSK operationalize the AL101 Phase 2 study. The decrease is partially due to a $15.2 million decrease in revenue recognized for the AL002 program due to the addition of AL002 LTE and patient replacement revenue in 2023. This was offset by a $9.8 million increase in revenue recognized for the latozinemab programs. Revenues are recognized as the program costs are incurred by measuring actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation.

Previous wording

General and administrative expenses were $14.4 million for the three months ended March 31, 2024, compared to $14.8 million for the three months ended March 31, 2023.

Current wording

General and administrative expenses were $14.4 million for the three months ended June 30, 2024, compared to $13.6 million for the three months ended June 30, 2023.

Previous wording

Other income, net was $7.6 million for the three months ended March 31, 2024, compared to $5.2 million for the three months ended March 31, 2023. The increase of $2.5 million was due to higher investment yields on our marketable securities.

Current wording

Other income, net was $7.0 million for the three months ended June 30, 2024, compared to $6.4 million for the three months ended June 30, 2023. The increase of $0.6 million was due to higher investment yields on our marketable securities.

Previous wording

Income tax expense was less than $0.1 million for the three months ended March 31, 2024, compared to $0.9 million for the three months ended March 31, 2023.

Current wording

Income tax expense was less than $0.1 million for the three months ended June 30, 2024, compared to $1.4 million for the three months ended June 30, 2023. The decrease was due to the full recognition of GSK revenue for tax purposes in 2023.

Previous wording

Research and development expenses were $45.2 million for the three months ended March 31, 2024, compared to $51.9 million for the three months ended March 31, 2023. The decrease of $6.7 million was mainly due to the Company’s prioritization on selected late-stage programs and a decrease in personnel related costs.

Current wording

Research and development expenses were $91.5 million for the six months ended June 30, 2024 compared to $98.1 million for the six months ended June 30, 2023. The decrease of $6.6 million was mainly due to the Company’s prioritization of selected late-stage programs and a decrease in personnel related costs.

Previous wording

As of March 31, 2024, we had $562.1 million of cash, cash equivalents, and marketable securities. As of March 31, 2024, we had an accumulated deficit of $746.2 million.

Current wording

As of June 30, 2024, we had $503.3 million of cash, cash equivalents, and marketable securities. As of June 30, 2024, we had an accumulated deficit of $784.8 million.

Previous wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities will enable us to fund our operations and capital expenditure requirements through 2026. We reduced our workforce to better align our resources with our current strategic priorities and maintain our expectations with respect to our ability to fund our operations. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. We may also choose to seek additional financing opportunistically. We may seek to raise capital through public equity or debt financings, license agreements, collaborative agreements or other arrangements with other companies, asset sales, or through other sources of financing. We have an omnibus shelf registration statement on Form S-3 with the SEC, which became effective on May 1, 2023, which permits us to issue up to $400 million in common stock, other equity securities and/or debt securities. We will need to obtain substantial additional funding in the future for our research and development activities and continuing operations. If we are unable to raise capital when needed or on favorable terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. On November 7, 2023, we entered into an at-the-market sales agreement with Cowen and Company, LLC (TD Cowen) pursuant to which we may offer and sell from time to time through TD Cowen up to

Current wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities will enable us to fund our operations and capital expenditure requirements through 2026. We reduced our workforce to better align our resources with our current strategic priorities and maintain our expectations with respect to our ability to fund our operations. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. We may also choose to seek additional financing opportunistically. We may seek to raise capital through public equity or debt financings, license agreements, collaborative agreements or other arrangements with other companies, asset sales, or through other sources of financing. We have an omnibus shelf registration statement on Form S-3 with the SEC, which became effective on May 1, 2023, which permits us to issue up to $400 million in common stock, other equity securities and/or debt securities. We will need to obtain substantial additional funding in the future for our research and development activities and continuing operations. If we are unable to raise capital when needed or on favorable terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. On November 7, 2023, we entered into an at-the-market sales agreement with Cowen and Company, LLC (TD Cowen) pursuant to which we may offer and sell from time to time through TD Cowen up to $125,000,000 of shares of our common stock, in such share amounts as we may specify by notice to TD Cowen. On January 17, 2024, we entered into an underwriting agreement with Cantor Fitzgerald & Co. (Cantor), pursuant to which we offered and sold 10,869,566 shares of the Company’s common stock at a price per share of $6.57 paid by Cantor.

Previous wording

our eventual commercialization plans for our product candidates;

Current wording

our precommercial activities and eventual commercialization plans for our product candidates;

Previous wording

For the three months ended March 31, 2024, cash used in operating activities was $61.3 million. This was mainly due to the net loss of $36.1 million. We also had a decrease in deferred revenue of $15.9 million, a decrease in refund liability to collaboration partner of $12.2 million, and a decrease in accrued liabilities and accrued clinical supply costs of $10.3 million. This was offset by a non-cash charge of $10.3 million for stock-based compensation.

Current wording

For the six months ended June 30, 2024, cash used in operating activities was $124.1 million. This was mainly due to the net loss of $74.8 million. We also had a decrease in deferred revenue of $31.0 million, a decrease in refund liability to collaboration partner of $22.5 million, and a decrease in accrued liabilities and accrued clinical supply costs of $9.8 million. This was offset by a non-cash charge of $20.2 million for stock-based compensation.

Previous wording

For the three months ended March 31, 2023, cash used in operating activities was $48.5 million. This was mainly due to the net loss of $45.9 million. We also had a decrease of $7.0 million in accrued liabilities and accrued clinical supply costs. This was offset by a non-cash charge of $11.0 million for stock-based compensation.

Current wording

For the six months ended June 30, 2023, cash used in operating activities was $91.6 million. This was mainly due to the net loss of $44.5 million. We also had a decrease in deferred revenue of $49.3 million.

Previous wording

For the three months ended March 31, 2023, cash used in investing activities of $88.7 million was primarily related to the maturities of marketable securities of $210.0 million offset by purchases of marketable securities of $120.3 million.

Current wording

For the six months ended June 30, 2024, cash provided by investing activities of $25.4 million was primarily related to the maturities of marketable securities of $322.2 million offset by purchases of marketable securities of $297.8 million.

Previous wording

For the three months ended March 31, 2024, cash used in investing activities of $11.8 million was primarily related to the maturities of marketable securities of $196.5 million offset by purchases of marketable securities of $185.2 million.

Current wording

For the six months ended June 30, 2023, cash used in investing activities of $66.9 million was primarily related to the maturities of marketable securities of $337.6 million offset by purchases of marketable securities of $268.5 million.

Previous wording

For the three months ended March 31, 2024, cash provided by financing activities of $71.1 million was primarily from the issuance of common stock upon a public offering.

Current wording

For the six months ended June 30, 2024, cash provided by financing activities of $71.8 million was primarily from the issuance of common stock upon a public offering.

Previous wording

For the three months ended March 31, 2023, cash provided by financing activities of $1.1 million was primarily from the exercise of options to purchase common stock.

Current wording

For the six months ended June 30, 2023, cash provided by financing activities of $1.9 million was primarily from the exercise of options to purchase common stock.