Alector - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 collaboration revenue rose sharply to $54.2M, driving a dramatic improvement in GAAP EPS to $(0.02), versus $(0.49) in Q4 2023 and $(0.43) in Q3 2024, as recognition from AL002 and latozinemab programs accelerated; AbbVie-related collaboration revenue was fully recognized by year-end.
• 2025 guidance reset: collaboration revenue $5–$15M; R&D $175–$185M; G&A $55–$65M, reflecting lower recognized partner revenue in 2025 and disciplined OpEx; cash/investments were $413.4M, funding operations through 2026.
• Key clinical catalysts: INFRONT‑3 Phase 3 latozinemab topline in FTD‑GRN by Q4 2025; PROGRESS‑AD Phase 2 AL101 enrollment completion by mid‑2025; AL002 Phase 2 (TREM2) did not meet the primary endpoint, detailed results to be presented April 5, 2025.
• Management emphasized regulatory alignment (Breakthrough Therapy) and biomarker strategy for latozinemab; confidence in the totality of evidence to support a potential BLA remains high.

What Went Well and What Went Wrong

What Went Well

• Strong Q4 revenue uplift and EPS improvement: Collaboration revenue $54.2M vs. $15.2M YoY; GAAP EPS improved to $(0.02), aided by higher program revenue and other income.
• Clinical execution: INFRONT‑3 nearing readout timeline; PROGRESS‑AD progressing toward full enrollment by mid‑2025.
• Strategic pipeline momentum: ABC platform advancing with lead selections for ADP037‑ABC (anti‑Aβ) and ADP050‑ABC (GCase replacement), targeting IND‑enabling studies in 2025 and clinical entry in 2026.
  • “We are making significant progress… selectively applying our proprietary Alector Brain Carrier… to potentially improve safety and efficacy.” — Sara Kenkare‑Mitra.

What Went Wrong

• TREM2 program setback: AL002 Phase 2 (INVOKE‑2) did not meet its primary endpoint; results to be presented April 5, 2025, tempering near‑term optionality.
• 2025 revenue guide reset sharply lower ($5–$15M) post‑full recognition of AbbVie revenue, signaling a trough year for collaboration revenue ahead of major readouts.
• Cash drawdown through 2024 (from $503.3M at Q2 to $413.4M at year‑end) as programs advance, albeit runway remains through 2026.

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, and welcome to Alector Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you would need to press star one one on your telephone. You will then hear an automated message advising your hand. To withdraw your question, please press star one one again. As a reminder, this conference is being recorded. I would now like to turn the call over to Katie Hogan, Senior Director of Corporate Communications and Investor Relations. Please go ahead.

Katie Hogan (Senior Director of Corporate Communications and Investor Relations)

Thank you, Operator, and hello, everyone. Earlier this afternoon, we released our financial results for the fourth quarter and full year 2024. The press release is available on our website at www.alector.com, and our 10-K was filed with the Securities and Exchange Commission this afternoon. Joining me on the call today are Dr. Arnon Rosenthal, Co-founder and CEO, Dr. Sara Kenkare-Mitra, President and Head of Research and Development, Dr. Gary Romano, Chief Medical Officer, and Dr. Marc Grasso, Chief Financial Officer. After our formal remarks, we'll open the call for Q&A. I'd like to note that during this call, we'll be making a number of forward-looking statements. Please take a moment to review our slide on the webcast, which contains our forward-looking statement disclosure, and we also encourage you to review our SEC filings for more information.

I would now like to turn the call over to Arnon Rosenthal, Chief Executive Officer. Arnon?

Arnon Rosenthal (Co-founder and CEO)

Thank you, Katie. Good afternoon, everyone, and thank you for joining Alector's fourth quarter and full year 2024 financial results conference call. I'd like to begin by outlining our strategic direction guiding Alector forward and the opportunities that lie ahead. We are focused on discovering and developing first or best-in-class disease-modifying therapies for neurodegenerative disorders such as frontotemporal dementia, Alzheimer's disease, and Parkinson's disease with high unmet medical needs, where effective medicines are urgently required. To achieve this, we continue to build an integrated biotechnology organization that combines deep expertise in genetics, immunology, and neuroscience with extensive drug discovery, protein engineering, and manufacturing, as well as clinical development and regulatory capabilities. We pursue therapies that target underlying mechanisms of neurodegeneration, such as toxic misfolded proteins, deficient proteins, and dysfunction in immune, lysosomal, and neuronal systems.

Our portfolio includes two first-in-class late-stage clinical programs developed in collaboration with GSK, along with five discovery programs encompassing antibodies, enzymes, and nucleic acids, addressing both novel and more established targets. Central to our programs is Alector Brain Carrier, or ABC, our proprietary and versatile blood-brain barrier platform. ABC aims to enhance the delivery of our protein and nucleic acid therapeutics to the brain to improve efficacy and increase safety at lower doses and costs. We are advancing our wholly owned ABC-based programs and expect to be in the clinic in 2026. We anticipate realizing a significant portion of the company's potential in 2025. The readout of our pivotal phase III trial in frontotemporal dementia with progranulin gene mutation is planned for later this year. Additionally, we expect to complete patient recruitment for Progress AD, our phase II trial of AL101 in early Alzheimer's disease.

Beyond these initiatives, we are also advancing our preclinical pipeline, which Sara will discuss later today. Throughout this process, we remain committed to making data-driven decisions that create sustainable value. With that, I'll turn the call over to Gary to discuss our goals and expectations for our clinical development programs. Gary?

Gary Romano (Chief Medical Officer)

Thank you, Arnon. I'll begin with Latozinemab, our novel first-in-class progranulin-elevating candidate, which we are developing in partnership with GSK. It is the most advanced therapeutic candidate in clinical development for the treatment of frontotemporal dementia in patients with a granulin mutation, or FTD granulin. FTD is a rare neurodegenerative disease, but it is one of the most common causes of early-onset dementia. Currently, there are no approved treatment options available for patients with FTD. Heterozygous loss of function mutations in the granulin gene result in haploinsufficiency of progranulin, reducing CNS levels to 50% of normal, and are causal for FTD with penetrance that approximates 100%. Latozinemab is a novel investigational human monoclonal antibody designed to block and downregulate the sortilin receptor, which is one of several receptors that take up progranulin from the extracellular space. This blockade results in an increase in extracellular progranulin.

Latozinemab has been evaluated in phase I and phase II trials with ongoing evaluation in a pivotal phase II trial for which top-line data is expected by the fourth quarter. The INFRONT-2 phase II open-label study evaluated treatment effects of Latozinemab in 12 subjects with symptomatic FTD-GRN. Effects on progranulin levels and biomarkers of lysosomal function, inflammation, astrogliosis, and neurodegeneration were assessed after 12 months of treatment. Treatment restored progranulin to normal levels in both plasma and CSF, representing a two- to three-fold increase, which was rapid and sustained over the treatment duration of 49 weeks. Although the number of participants in this cohort was relatively small, all the biomarker data moved in the direction that we would expect if Latozinemab slows the progression of FTD pathophysiology.

To determine whether there was a treatment-related slowing of disease progression, we assessed change on the CDR plus NACC FTLD-SB, which is an FTD-specific modification of the clinical dementia rating scale with additional modules to assess behavioral and language deficits that health authorities have confirmed will be acceptable as a primary endpoint in our pivotal phase III trial. We conducted a blinded comparison of disease progression rates between the Latozinemab-treated participants in INFRONT-2 to baseline propensity match participants from the GenFI2 observational study. This analysis demonstrated that clinical disease progression in the Latozinemab-treated subjects was slowed by 48% over one year compared to the GenFI2 subjects. INFRONT-3 is a pivotal phase III randomized double-blind placebo-controlled trial with a treatment duration of 96 weeks.

The trial enrolled 103 symptomatic and 16 at-risk FTD-GRN participants who were randomized to receive either 60 mg per kg of Latozinemab intravenously every four weeks or placebo. Importantly, in this phase III study, we are collecting the same clinical outcome assessments and biomarkers that we assessed in the phase II study of Latozinemab. Previously, we gained alignment from the FDA and EMA to conduct a primary analysis on symptomatic participants in INFRONT-3. We intend to include the at-risk participants in sensitivity analyses. In February 2024, FDA granted Latozinemab breakthrough therapy designation for FTD-GRN based on our INFRONT-2 phase II clinical trial data. With this designation, last year, we held a type B interaction with FDA on the potential future biologics license application for Latozinemab.

The FDA indicated that it would consider the effects of Latozinemab on plasma and CSF progranulin levels as confirmatory evidence, supplementing the potential clinical effects of Latozinemab pending BLA review. We also aligned with the agency on disease-relevant fluid and imaging biomarkers that may be considered as supportive evidence of clinical efficacy, also subject to BLA review. Based on the FDA feedback and the strength of our trial design, we remain confident that the totality of evidence, including the primary clinical endpoint and biomarkers, could provide a path to potential full approval for Latozinemab. In September of 2024, we presented the patient baseline characteristics for INFRONT-3 at the 14th International Conference on Frontotemporal Dementias, or ISFTD 2024. The baseline characteristics of symptomatic participants, including age, CDR plus NACC FTLD-SB scores, and NfL levels, were representative of the broader FTD-GRN registry population based on available registry data.

INFRONT-3 is designed to provide approximately 90% power to detect a 40% slowing of disease progression. If our trial design assumptions hold, a 25% slowing of disease progression is expected to be statistically significant. I'd like to now turn to AL101, our second product candidate in our progranulin portfolio that we are developing in partnership with GSK. Like Latozinemab, AL101 is a monoclonal antibody designed to block and downregulate the sortilin receptor to elevate the level of progranulin in the brain. Its distinct pharmacokinetic and pharmacodynamic properties have the potential to enable dosing regimens that may be more suitable for use in the treatment of larger indications, such as Alzheimer's disease. Our phase I study in healthy volunteers demonstrated that AL101 was well tolerated and increased progranulin levels in plasma and CSF in a dose-dependent manner.

The ongoing Progress AD phase II trial of AL101, operationalized by our partner GSK, is enrolling approximately 282 participants with early Alzheimer's disease across multiple global sites, with enrollment expected to complete by mid-2025. The first participant was dosed just one year ago in February 2024. Progress AD is a 76-week randomized double-blind placebo-controlled clinical trial of AL101 designed to assess the safety and efficacy of two doses of AL101 compared to placebo. The primary endpoint of the study is disease progression as measured by the clinical dementia rating sum of boxes. The trial also employs other clinical and functional outcome assessments and biomarkers. We look forward to sharing additional information on Progress AD as the trial advances.

Finally, on April 5th, we plan to present the results from the INVOKE-2 phase II clinical trial, which evaluated the safety and efficacy of AL002, a TREM2 agonist in individuals with early Alzheimer's disease. Results will be delivered during an oral presentation at the AD/PD 2025 International Conference on Alzheimer's and Parkinson's Disease, taking place in Vienna, Austria. We remain committed to advancing the understanding of Alzheimer's pathophysiology and the development of effective therapeutics for the disease. With that, I'll now turn the call over to Sara to provide an update on our preclinical pipeline. Sara?

Sara Kenkare-Mitra (President and Head of Research and Development)

Thank you, Gary. We are making swift and steady progress in advancing our Alector Brain Carrier and our preclinical and research pipeline with strong momentum across several key programs. As Arnon noted, our strategy focuses on developing product candidates that remove toxic proteins, replace critical deficient proteins, and restore immune and nerve cell function. To pursue this aim, we are advancing a portfolio of programs that address both novel and established targets. These programs leverage our deep understanding of the genetic underpinnings of neurodegenerative diseases, combined with our expertise in drug discovery and our proprietary ABC technology for blood-brain barrier transport. At Alector, we've worked hard over several years to realize the potential of our proprietary Alector Brain Carrier technology platform. Our ABC platform enables the targeted delivery of therapeutics to the brain.

We believe that its versatile and tunable design enables us to optimize efficacy and safety while facilitating the efficient and well-distributed transport of a wide variety of payloads. We have applied our ABC technology to multiple therapeutic cargoes. Our ABC platform targets receptors that are expressed on the blood-brain barrier using receptor-mediated transcytosis to enable the efficient delivery of therapeutics across the blood-brain barrier and ensuring their targeted action within the brain parenchyma. Our ABC technology is used in several of our preclinical programs, including our candidate that replaces GCase and our candidates that target amyloid beta and tau pathology. ADP037ABC is our proprietary anti-amyloid beta antibody paired with ABC for the treatment of Alzheimer's disease. By leveraging ABC technology, ADP037ABC aims to clear amyloid beta efficiently, thereby reducing plaque accumulation and slowing disease progression while minimizing the risk of ARIA.

It targets a validated epitope specific to brain amyloid beta plaques combined with an optimized antibody constant region to enhance phagocytosis of amyloid beta plaques. In Parkinson's disease, we are advancing ADP050ABC, a GCase replacement therapy for GBA gene mutation carriers with Parkinson's disease. In these patients, GBA mutations lead to deficient GCase activity. ADP050ABC uses an engineered GCase, which is proprietary and has been designed to be more stable and active. ADP050ABC aims to prevent the accumulation of toxic brain sphingolipids that contribute to neurodegeneration. By addressing this mechanism, our goal is to reduce cellular dysfunction and slow disease progression. We are currently selecting lead candidates for both our anti-amyloid beta and GCase programs, and we are on track to advance them towards IND enabling studies this year.

We are also developing two tau-targeting programs that each take a distinctive approach to tackling tau pathology for the treatment of Alzheimer's disease. One program focuses on using an anti-tau antibody, while the other focuses on using an anti-tau siRNA. In addition, we are also advancing a relin modulator designed to block tau pathology and promote synaptic function for the treatment of Alzheimer's disease. Lastly, in collaboration with the University of Luxembourg, Alector was awarded a $1.7 million grant from the Michael J. Fox Foundation for Parkinson's research. This funding will support our research on GPNMB, a promising target for Parkinson's disease. Looking ahead, we plan to hold a virtual educational event in the second quarter of 2025 to share additional preclinical data on our anti-amyloid beta and GCase programs, as well as other advancements in our ABC platform.

With that, I'll now turn it over to Marc to provide an update on our financial results. Marc.

Marc Grasso (CFO)

Thank you, Sara. As summarized in our fourth quarter and full year 2024 financial results, which we made available after the market closed today, we are in a strong cash position to deliver against our strategic objectives. We continue to focus on fiscal management and program prioritization, and as of December 31, 2024, our cash, cash equivalents, and short-term investments totaled $413.4 million. Now, turning to our operating results. Collaboration revenue for the fourth quarter was $54.2 million compared to $15.2 million for the same period in 2023. Collaboration revenue for the year was $100.6 million compared to $97.1 million in 2023. Total research and development expenses for the fourth quarter were $46.5 million compared to $47.7 million for the same period in 2023. Total research and development expenses for the year were $185.9 million compared to $192.1 million in 2023.

Total general and administrative expenses for the quarter were $15 million compared to $14.9 million for the same period in 2023. Total general and administrative expenses for the year were $59.6 million compared to $56.7 million in 2023. For 2025, we estimate our collaboration revenue to be between $5 and $15 million. Our anticipated total research and development expenses are estimated to be between $175 and $185 million, and total general and administrative expenses are estimated to be between $55 and $65 million. We remain focused on advancing our broad and diverse portfolio, as well as our Alector Brain Carrier technology to treat neurodegenerative diseases. We look forward to providing additional updates as we progress our work. That concludes our prepared comments for today's call. Operator, you may now open the line for questions.

Operator (participant)

Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. The first question will come from Pete Stavropoulos with Cantor Fitzgerald. Your line is now open.

Pete Stavropoulos (Director of Biotech Equity Research)

Hi, good afternoon, and congratulations on all the progress. One question for me is, when you are thinking about the INFRONT study, treating earlier in the course of a neurodegenerative disease should result in greater clinical benefit, and you see a larger separation between active arm and placebo. With that in mind, for the baseline characteristics of INFRONT, I believe 22% of the patients have a CDR FTLD global score of 0.5, 48% have a score of 1, 31% have a score of 2. What gives you confidence that you enrolled the correct proportion of patients for each score that will allow you to see a clear separation between latozinemab and placebo, and was there a cap for any of these patient populations?

Gary Romano (Chief Medical Officer)

Yeah, hi Pete, it's Gary. Thanks for the question. Good question. We set out to enroll, as you said, this distribution of 0.5-2 on the global score, and this was intentional to try to target the early symptomatic population of FTD granulin. As you say, there's always a bit of a balance between trying to treat earlier, where we think we can imagine that there might be more room for greater efficacy, but also including patients that are a little bit further along and may be progressing somewhat faster. This is what we set out to do, and we're very happy that we were able to bring in that very population. We did cap the CDR IIs, and we reached that cap and stopped enrollment earlier in about two-thirds or so through the trial.

That was intentional because we did not want to have too many patients or participants that had been further progressed and therefore might not be as responsive to treatment theoretically. The other thing I just want to point out is, even though our primary analysis is focused on the symptomatic subjects that we just discussed, we also collected a small cohort of patients or participants that are GRN mutation carriers, but had a certain threshold of NfL, neurofilament light. Although we are not including those in the primary analysis, we will be looking at those patients with sensitivity analyses in our analysis plan. That is at least what we are planning to do.

I think it's not a far stretch to think that if we can find efficacy in the symptomatic subjects, that there could be a potential, if we also see in sensitivity analyses some benefit in the pre-symptomatics, that patients, subjects, that it wouldn't be a far stretch to think that we might be able to get some type of preliminary approval pending some post-marketing data. Why wait? If it works in symptomatic subjects, why should patients wait until they're impaired to start treatment?

Pete Stavropoulos (Director of Biotech Equity Research)

Follow up on that.

Gary Romano (Chief Medical Officer)

Next question, Pete.

Pete Stavropoulos (Director of Biotech Equity Research)

Yeah, actually, yeah. So when you do look at the NfL levels of those 16 patients that you enrolled that are pre-symptomatic, and then you look at the Gen5 data, is there an expectation that there's actually going to be progression within those 96 weeks?

Gary Romano (Chief Medical Officer)

Yeah, good question again. At the time that the study started some years ago now, as you know, based on available data, the estimate was that those patients with the NfL threshold that we used in the study would progress within two years. In fact, based on additional data that is quite a bit of additional data that's come out since then and analyses by the GENFI and ALLFTD group has been published, it now looks like the threshold we used might have would be more along somewhere between two and four years to progress to symptomatic. That was one of the reasons that we opted to focus our primary analysis on symptomatic subjects. We still expect some of these patients to have progressed during the study.

Don't forget, our study is two years long, and even some of these subjects have been in for as many as four years now, given the long time it took to enroll.

Pete Stavropoulos (Director of Biotech Equity Research)

Okay. All right. Thank you very much for taking our questions.

Gary Romano (Chief Medical Officer)

Thanks, Pete.

Operator (participant)

The next question will come from Alex Stranahan with Bank of America. Your line is open.

Alec Stranahan (VP of Equity Research)

Hey, guys. Thanks for taking our questions. Just two from us. First, on AL101, do you think, given the shared progranulin targeting, there's anything to read through from INFRONT-3, or is this maybe hard given the different indications? Second question, appreciate the new color on the ABC candidate nominations. Maybe just walk us through the preclinical optimization that's going on for these assets from here and sort of your thought process around bringing additional assets forward would be great. Thank you.

Gary Romano (Chief Medical Officer)

Yeah, so maybe this is Gary. I'll start with answering your first question about AL101 and hand it off to Sara. We don't think that there's a read-through from the TREM2 trial to this trial just because the mechanisms are so very different. In this case, we're elevating progranulin, which we believe is going to have effects probably on the lysosomes, whereas the TREM2 was really a very specific approach to stimulate TREM2 signaling that would increase microglial functions in a different way. I don't think there's much read-through there. What I would say is that in a positive way is that we feel pretty confident now that the biomarkers that we used and the clinical outcome measures that we used in the TREM2 study performed very well there, showing us in a very definitive way that we had a negative study.

I am even more optimistic that the biomarkers will serve us very well again in this study in addition to the clinical outcomes, and that we'll get a clear answer. Alec, if I heard your question right, you were asking about 101 specifically and whether 1-3 would be.

Arnon Rosenthal (Co-founder and CEO)

Tied to the outcome of 101.

Gary Romano (Chief Medical Officer)

Oh, did I miss that? Sorry.

Arnon Rosenthal (Co-founder and CEO)

Yeah.

Gary Romano (Chief Medical Officer)

Am I correct in that, Alec?

Alec Stranahan (VP of Equity Research)

Yeah, I mean, both is helpful. Thank you.

Gary Romano (Chief Medical Officer)

My mistake. Yeah, I thought I heard 2.2. Okay, I'm sorry. Yeah, I mean, I think we are looking at those. Look, I think, again, they're different in the mechanism. One is in the case of the 1-3 study, that's the phase III study in FTD-GRN. These are patients that have a lifelong deficiency or haploinsufficiency of progranulin. And our hypothesis is that by normalizing that in an early stage of the disease, we can slow or stop the disease progression. In Alzheimer's disease, it's different. These are more what the genetics show us there is that less severe mutations that cause partial loss of function appear to increase the risk of Alzheimer's disease. Replacing it in that event could be protective against Alzheimer's. There's also a fair amount of animal data suggesting that increasing progranulin levels can be protective against Alzheimer's pathophysiology.

There are a little bit more links, certainly, than the TREM2, but in the sense that it's all about progranulin. We could imagine scenarios where one might be positive and the other would, or if one were negative, the other could still be positive.

Sara Kenkare-Mitra (President and Head of Research and Development)

Great. I think your question was around our ABC preclinical program. Maybe I'll just start, and if you need more clarity, you can ask further. As we said in our press release, we're actively progressing several preclinical programs. Certainly, the most advanced of those are ADP037ABC, which is our anti-amyloid beta antibody ABC program. The other is ADP050ABC, which is a GCase replacement therapy for Parkinson's disease. These programs are more advanced, and our goal is to get to an IND submission and to be in the clinic in 2026. Besides that, we are also applying our ABC technology to target tau, and we're taking two different approaches there. One is an antibody approach. The other is with a tau siRNA. These are not as further along as the two programs I mentioned.

We also have a relin modulator that is designed to block tau pathology and promote synaptic functions in Alzheimer's disease. Certainly, at this moment, I mean, if you have any other questions around this, I'm happy to answer.

Alec Stranahan (VP of Equity Research)

That's very helpful. Thank you for the color.

Sara Kenkare-Mitra (President and Head of Research and Development)

Okay.

Operator (participant)

Our next question will come from Paul Matteis with Stifel. Your line is now open.

Hi, this is Emily on for Paul. Just to kind of ask a little bit more about your ABC platform, could you maybe highlight some of the key differences with your blood-brain barrier platform with others, such as Denali or Roche efforts? Also, just a bit more specifically on ADP037 and 050, could you maybe talk a little bit more about the rationale of selecting those as your first two targets? Thank you.

Sara Kenkare-Mitra (President and Head of Research and Development)

Yeah, I can take that. Maybe Arnon, you can add. I think, firstly, to get to your question about our Alector ABC technology, I think it stands out in several ways. I would firstly say that our toolbox approach is versatile and tunable. And as you know, with ABCs, you're trying to maximize efficacy while minimizing the potential of safety, of tolerability. I think our technology provides for that very well because of that sort of versatility. It's not as rigid. We can fine-tune both in terms of the affinities, but also in terms of being able to match the right type of fragment with the right type of cargo. Overall, that gives us a very versatile, very tunable, and very adaptable platform that we can apply depending on whether it's an antibody, a protein, whether you need an FC or you don't need an FC, etc.

Now, coming to our two different programs, ADP037ABC, which is our AB amyloid beta technology, we believe that firstly, it targets a validated epitope, which is the pyroglutamate 3A beta epitope, which is with our brain-penetrant ABC. We also have a fully active FC, which is essential for the phagocytosis of amyloid beta plaque. We are also sort of configuring the affinity to TFR. We've been able to fine-tune it to allow us to get sort of the most optimal half-life, minimal safety, as well as maximal brain penetration. Now, certainly, this is all preclinical, but we believe that the combination of all of this allows ADP037ABC to have the potential to be a best-in-class molecule in the future. Now, ADP050ABC, which is our GCase ABC program in targeting Parkinson's disease, again, we are developing that.

This is our natural GCase is a very unstable and short-lived molecule. We've engineered a much more stable and active GCase enzyme through mutagenesis, which also has minimal potential to be immunogenic. ADP050, again, paired with our ABC technology, really could enable brain penetration and the potential for treatment of Parkinson's disease.

Great. Thank you so much.

Operator (participant)

The next question will come from Tom Schrader with BTIG. Your line is open.

Tom Schrader (Managing Director and Healthcare Analyst)

Good afternoon. Thanks for taking the questions. More on the shuttle, I'm afraid. Can you talk a little bit about your decision to use siRNA versus ASOs? I think almost everyone else is on the ASO side. Specifically, are there good preclinical models for some of the problems that ASOs can run into, like inflammation and protein buildup? When will you know if that's a differentiated approach? Maybe any thoughts you have about why you took this approach?

Arnon Rosenthal (Co-founder and CEO)

It seems as if the field is moving to siRNA from ASO. It seems as if siRNAs have a better on-target activity, sort of fewer side effects, better stability. Yeah, we are testing it now, and yeah, we know in the next six months or so how good it is. If you look at the literature, if you compare side by side the efficacy of ASOs versus siRNA, for example, against tau, there are indications that siRNA is more potent in sort of blocking the target. It seems as if there are some efficacy advantages as well as safety advantages. You're right. This is just an evolving field, and we'll see which of the two nucleic acid technologies is better.

Tom Schrader (Managing Director and Healthcare Analyst)

A quick follow-up. Do you see this as a good place for M&A and some sort of another big deal, or do most companies have the technology they want? Is that something we should be looking for as you out-licensing some piece of your technology for some non-dilutive funding?

Arnon Rosenthal (Co-founder and CEO)

I mean, the sort of blood-brain barrier is still a technology that multiple companies are seeking. I mean, there are actually sort of few companies with mature blood-brain barrier technologies, and most of the companies with good technologies are sort of either engaged already or are going to be quite expensive. I think that conceptually, there is a lot of—we see a lot of inbound interest, and there is a lot of interest in our technology. Again, because it conceptually could be utilized for antibody therapeutics, enzyme replacement therapy, nucleic acid therapy, it could improve sort of the convenience of delivery from intravenous to subcutaneous. In the case of Alzheimer's disease, it can sort of reduce or possibly even eliminate area-like adverse effects.

I think there is a lot of interest in the technology, and I think that even though the technology is conceptually simple, to really optimize it and really thread this needle between efficacy and safety is not so easy. I think there are actually only two or three companies that have the mature technology. There is still, I think, a lot of demand for the technology.

Tom Schrader (Managing Director and Healthcare Analyst)

Yeah, great. Thank you for the color.

Arnon Rosenthal (Co-founder and CEO)

Thanks, Tom.

Operator (participant)

The next question comes from Yaron Werber with TD Cowen. Your line is open.

Yaron Werber (Managing Director and Senior Biotechnology Analyst)

Great. Thanks for taking my question. I had a question maybe on INFRONT-3. As you're looking at the primary endpoint in symptomatic patients, can you give us a sense to just remind us how it's powered? Just remind us also the data that we're going to see by year-end, do you think that's going to be the fully mature data, or are you going to continue to follow up at that point onwards? Thank you.

Gary Romano (Chief Medical Officer)

Yeah, thanks, Yaron. Good questions. The study is powered for approximately 90%. We have about approximately 90% power to detect a 40% slowing of disease progression. If our study design assumptions hold with regard to proportionality and dropouts and stuff, which we expect, if we observe a 25% slowing of disease progression at the end of the study, we expect that that'll be a positive p-value. I hope that answers your question about the power. The second part of your question was.

Arnon Rosenthal (Co-founder and CEO)

Whether it's going to be all the data together.

Gary Romano (Chief Medical Officer)

Yeah, I'm sorry. Right. Yeah. This will include—all the data. It'll be two years of data on all participants, 96 weeks of data on all participants, plus data from a long-term extension that we'll also be looking at, which, as I mentioned earlier, we've had patients now in a long-term extension for as long as four years, up to four years.

Marc Grasso (CFO)

Also supporting biomarkers as well.

Gary Romano (Chief Medical Officer)

Yeah. In addition to the primary endpoint, I'll remind you that we had a meeting with FDA in the middle of last year under our breakthrough therapy designation status where we discussed a number of biomarkers. It was very encouraging. They agreed that we came to an agreement that we could use, in addition to the primary clinical endpoints, we can also lean into the changes or treatment-related changes in progranulin levels, both in CSF and plasma, which would be considered as confirmatory evidence. We also discussed a number of fluid and imaging biomarkers that we felt we made a case that should be predictive of clinical benefit. They also agreed that those biomarkers would be looked at as potentially supportive of clinical data.

I think kind of wrapping that all up, we're feeling optimistic that FDA is going to look at the totality of the data and both clinical outcomes and biomarkers. In this rare, very rare disease where there's no other treatments, this gives us a good chance. We are planning for a full approval based, first off, the primary endpoint, the CDR. If for some reason unexpectedly the primary endpoint disappoints, I think we're going to have a lot of other potentially supportive data that could give us a backup plan.

Arnon Rosenthal (Co-founder and CEO)

Thanks, Yaron.

Operator (participant)

The next question will come from Sarah Schram with William Blair. Your line is open.

Sarah Schram (Investment Analyst)

Thanks, guys. Thanks for taking the questions. Going back a little bit to the preclinical programs, can you just remind us specifically how that pyroglutamate Aβ epitope that you're targeting with 037 differs from both the approved Aβ antibodies as well as some of the other ones in development like tratinumab, which does also use a brain shuttle technology, and kind of how those different epitopes might lead to differentiation? Could you also just remind us if 037 uses a TFR or a CD98 mediated brain shuttle system? Thanks.

Sara Kenkare-Mitra (President and Head of Research and Development)

Yeah. Firstly, I mean, if we let's go to the trantinumab molecule targets the internal region of amyloid beta versus our program, ADP037 targets the pyroglutamate 3A beta epitope, which actually is similar to the epitope in donanemab and remternectec. I think the second part of your question—could you repeat the second part of your question? Sorry, Sarah.

Sarah Schram (Investment Analyst)

Yeah. Sure. How might the different epitopes lead to differentiation in terms of targeting potentially different plaque species?

Sara Kenkare-Mitra (President and Head of Research and Development)

Yeah. I mean, I think the way we see it is that because we're targeting the pyroglutamate Aβ epitope, which is a validated epitope, certainly that has been demonstrated as a naked antibody to be effective. That is wonderful. As you know, the trantinumab molecule is a shuttle-enabled molecule. The naked molecule, canakinumab, was not effective in the clinic. I think that bodes really well to using a pyroglutamate Aβ epitope in our ABC construct. In addition, as I said, we have a fully active FC. More importantly, we fine-tuned our affinity for TFR. I think one of your questions was, are we using TFR and VR for this molecule? We have configured the affinity to TFR to optimize it to have sort of minimal safety, RBC reductions, and optimal half-life and brain penetration.

Sarah Schram (Investment Analyst)

Got it. Very helpful. Thank you.

Arnon Rosenthal (Co-founder and CEO)

Thanks, Sarah.

Operator (participant)

As a reminder to ask a question, please press star one one on your telephone. The next question comes from Sam Lee with Mizuho. Your line is now open.

Hi, this is John. I'm actually for Graig Suvannavejh. Thanks for taking our questions. A couple on our end. For INFRONT-3, can you please remind us how you've enriched for patients to more generally optimize the trial design in order to give yourself the best chance of success for efficacy? Also in FTD, knowing that there are several programs in clinical development, can you compare and contrast your approach versus the competitor programs and why you think latozinemab may offer an optimal therapeutic option when compared to the other programs? Thank you so much.

Gary Romano (Chief Medical Officer)

Yeah, thanks. I'm going to have to ask you to repeat the first part of the question because there's a lot of background noise coming over with you. I'm sorry about that.

Sure. Just repeating for the first question, for INFRONT-3, can you just remind us how you've enriched for patients and more generally optimized the trial design to get the best chance of success to show efficacy? The second question with regard to just the competitive landscape for FTD, knowing that there are several programs in clinical development, can you just remind us of the differentiating factors of latozinemab, compare and contrast the approach, and why Alector might offer an optimal therapeutic option?

Yeah, thanks. Thank you for that. This was a—these FDA granulin patients, while they're out there because of underdiagnosis in general, and also when we started this, there wasn't a lot of genetic testing. They're difficult to find. I mean, in terms of enriching, we really just looked, went where the patients were. There were pockets of patients in different countries, in Italy, in Portugal, etc., and other where there are founder effects. We went there, we built the relationships with the sites, and we were able to enroll, as I said, eventually over 103 symptomatic subjects. In terms of the trial design, we really never—the trial design is not really—the trial execution has not changed. When this trial started, the plan was somewhat optimistically to analyze both the symptomatic and the pre-symptomatics at the same time.

We found that, as I mentioned earlier, that with more data being collected in the observational studies, Gen3 and all FTD, we learned a few things over the time that we were enrolling in the study. One is that there was a greater variability of progression in the pre-symptomatics because they don't progress very quickly. For that reason, it was one of the reasons we decided to focus the primary analysis on the symptomatic subjects that we described. That was reviewed with FDA and AMA, and they were actually both very pleased that we were doing that. As I mentioned earlier, we'll also still look at those pre-symptomatics in a sensitivity analysis. In terms of how does our approach differentiate from others, what we do is bring our mechanism by blocking sortilin receptor increases the progranulin levels back to normal range.

We have shown in our phase II study that if you do that, you see normalization of a number of biomarkers, or at least both inflammatory biomarkers, biomarkers of lysosomal function. We saw a normalization of GFAP. We saw a slowing of NfL accumulation. We also saw changes on imaging on volumetric MRI. Beyond that, we did a density-matched comparison of the subjects in our phase I study to baseline density-matched patients from the Gen3 study, and that showed a slowing of disease progression by up to 48%. For all those reasons, we believe that this is having an effect on the pathophysiology. In terms of the other approaches, whether it is a gene therapy or delivering the protein directly, I think it is too soon to say. I mean, it may be that there is always the potential.

Progranulin is a very ubiquitous protein with many functions, and we get a little nervous when we think about increasing progranulin levels well above normal, but our approach normalizes them. I think we'll know with time whether more is better or whether some of these other approaches are more or less effective, but they're pretty far behind. I mean, like I said, we're months away from a readout on our phase III study, and we're quite optimistic.

That's really helpful, color. Thank you so much.

Operator (participant)

I show no further questions at this time. I would now like to turn the call back over to Marc for closing remarks.

Marc Grasso (CFO)

Thank you, operator. Before we end the conference call, I'd just like to share that Alector will be participating in a number of upcoming conferences, including TD Cowen's 45th Annual Healthcare Conference next week on March 4th in Boston. We'll be there. Lyrinx 2025 Global BioPharma Conference the following week. We'll be there March 11th in Miami. We are also looking forward to Stifel's 2025 Virtual CNS Forum on March 18th. Thank you again for your time and attention, and we will now conclude today's call.

Operator (participant)

Thank you. This does conclude today's conference call. Thank you for participating. You may now disconnect.