One way I gain conviction in an investment opportunity is whether I believe in the mission. Because even if I am wrong and the company fails, it is always worth investing in something that may positively improve humankind.
Alector’s mission is to eliminate neurogenerative diseases by modulating the immune system in the brain.
We all know how awful it is seeing a grandparent or parent slowly begin to lose their brain function. Our brains are us, and when our loved one’s slowly lose brain function, we witness the horridness of seeing their essence slowly fade.
Alector’s Novel Platform
Alector’s lead program, AL001, is addressing Frontotemporal Dementia (FTD), which leads to loss of brain function for personality and language.
What makes Alector unique in addressing this disease is by leveraging genetic insights about neurology for developing their medicines.
For example, it is well understood that if Progranulin (PGRN) isn’t at normal levels, neurodegenerative disorders can occur. PGRN levels are based on genetics.
If both PGRN genes are mutated, it can lead to childhood dementia; and if one of the two copies of PGRN are mutated, their is a 90% chance it will lead to FTD for someone later in the life.
AL001 has been tested in humans and has successfully demonstrated it is able to increase PGRN levels back to normal range in both symptomatic and pre-symptomatic FTD patients. The program is currently in Phase 3 with clinical trial enrollment ongoing.
The company is also initiating a Phase 2 study with AL001 for amyotrophic lateral sclerosis (ALS) caused by C9orf72 repeats.
In addition to these two programs focused on PGRN levels, Alector has AL002 and AL003 enrolling Phase 2 and Phase 1b trials respectively for Alzheimer’s disease.
Until recently, their hasn’t been a new drug approved for Alzheimer’s disease since 2003.
Alector has a broad pipeline of therapeutics with four programs in the clinic and eight more in the pre-clinical phase.
By targeting diseases based on genetic insights, with large patient populations that need new therapies, Alector’s novel neuroimmunology approach provides viable place for capital investment.
Alector’s Business Operations
Alector has conducted two high profile business development deals with AbbVie and GSK — two world-class pharmaceutical companies.
Their recent one with GSK (July 2021), to co-develop AL001 and AL101 for a range of neurodegenerative diseases, will result in co-commercialization efforts with shared profits in the U.S., while GSK will retain rights outside the U.S. Alector will receive $700M in upfront payment with the potential for another $1.5B in clinical, regulatory and commercial milestones as the programs potentially progress.
As of March 2021, Alector had $360M~ of cash in the bank and is burning about $50M~ a quarter. Note, their recent quarterly update was before the GSK business development deal, so their cash position may be around $1B now (but will have to see on their next earnings call on August 10th).
Alector is currently trading at $30 a share and has a market cap of $2.6B. The 52-Week-High was $43 a share and the 52-Week-Low was $9 a share.
I had the pleasure of working on the Alector IPO back in February 2019.
Since then, I’ve seen Alector execute and continue to build out the future of treating neurodegenerative diseases. Their programs are generating data and moving along in the clinic and they have a deep pipeline of drug candidates that all have a shot at meaningfully addressing neurological related diseases.
I have been an investor in the company since 2020, but have started to increase my position as I have seen them execute.