gorodenkoff
Alector Inc. (NASDAQ:ALEC) is a great speculative biotech play to look into. It has a few drug candidates targeting multiple disease targets, but where I think it could possibly do well is the exploration of two drugs targeting Alzheimer’s Disease (AD). It recently initiated a phase 1 study exploring the use of its drug AL044 for AD. What brings about such potential is that it is the first drug specifically targeting the MS4A gene cluster, which is believed to have a direct correlation with soluble TREM2 (sTREM2) concentrations. Besides AD, another possible indication for AL044, is listed as an orphan neuro indication in the pipeline. Which means that the targeting of the MS4A gene cluster may be applicable against another rare neurodegenerative disease. Besides AL044 for AD, there are other candidates in the pipeline targeting this disease which are AL101 and AL002. AL101 is partnered out with GlaxoSmithKline (GSK) being explored in an ongoing phase 1 study, whereas AL002 is partnered out with AbbVie (ABBV) being explored in an ongoing phase 2 study known as INVOKE-2. While it remains to be seen whether one of these 3 approaches work in treating AD, this is a good speculative name because of these shots on goal for a very large market opportunity. Based on this premise, this is why I believe it is a great speculative biotech play to look into.
First Drug Targeting MS4A Gene Cluster Brings New Targeting Approach For Treating Alzheimer’s Disease
About a month ago, Alector got the go ahead to initiate a phase 1 study to treat patients with Alzheimer’s Disease (AD) with the use of AL044. Why I think this may offer a good target opportunity against this disease is because it is an entirely different approach compared to the many other biotechs going after this. Matter of fact, AL044 is the first clinical drug to target the MS4A gene cluster against AD. It is able to target through or directly TREM2. TREM2 stands for “triggering receptor expressed on myeloid cells 2”. However, it remains unknown on whether or not targeting soluble TREM2 (sTREM2) genetic modifiers is possible. The bottom line is that there was an understanding of macrophages being able to validate a relationship between MS4A and TREM2. The goal for AL044 is to recruit microglia (brains immune cells) as an immune function to inhibit the formation of amyloid plaque deposits causing AD. I like that it has the ability to counteract multiple AD disease pathologies and not just focus on a particular one. The ability to use the brain’s immune system to go after these pathologies is what could bring about a potential shift for drugs targeting neurodegenerative disorders. Think a bit of the way immuno-oncology drugs use the immune system to fight cancer, whereas in this situation for AD microglia (brain immune system) is used to fight against it. This novel approach may prove to be capable of doing well, but this remains to be seen. A total of 72 healthy participants are being recruited into this phase 1 study using AL044 for AD. The main focus will be on safety/Pharmacokinetics (PK) data first, along with biomarker data to determine a relationship of MS4A with respect to targeting AD.
A Second TREM2 Approach For Treating Alzheimer’s Disease Is Already Underway
Above I discussed the relationship of MS4A and its associating with soluble TREM2 (sTREM2). However, there is another approach underway in targeting just TREM2 for AD, with a drug known as AL002. It is keen to say that AL002 is an anti-TREM2 antibody drug being explored for early Alzheimer’s Disease (AD). Again, TREM2 is associated with AD in that partial loss of its function as a protein brings about a change to how microglial cells act. Meaning, microglial cells not eliminating/reducing their response to amyloid plaques. Again, TREM2 is important because it functions to control multiple aspects of microglia (brain immune cells) such as:
- Survival
- proliferation (multiple increase in numbers)
- migration across the membrane
- Functionality
These microglia are responsible again for clearing beta amyloid deposits causing AD, and are also known to regulate neuroinflammation as well. That’s what makes TREM2 a great target for AL002. This approach of targeting TREM2 directly for AD remains to be seen, but an entity also excited about such an approach would be AbbVie. That’s because AbbVie still remains committed to this drug, for now, based on a deal formed back in 2017. Another drug targeting the protein CD33 partnered with AbbVie, AL003, didn’t live up to expectations. Hopefully AL002 targeting TREM2 doesn’t suffer the same fate, but since it’s a different target, this might be different. Time will tell whether or not this approach works instead. There is an ongoing phase 2 study known as INVOKE-2, which is using AL002 for the treatment of patients with early AD that was initiated in January of 2021. However, it could be a few years before results from this mid-stage study are released. It is expected that results from INVOKE-2 are not expected until at least 2024.
A Third Drug for Treating Alzheimer’s Disease Brings Another Shot On Goal
Treating Alzheimer’s Disease is very tough, as I have stated in many articles the failure rate is quite high. However, having three shots on goal somewhat reduces such a risk. Alector is not guaranteed to succeed in treating AD, but offering a few different approaches might improve its odds. A third drug in the pipeline to go over involves the use of AL101, which is being explored in a phase 1 study in healthy volunteers. It is being developed to target progranulin levels similar to what AL001 was developed for. The goal of increasing PRGN (progranulin) levels is to protect against damage/reduction of this protein. Reduced levels of PRGN is what may contribute to the advancement of AD. There might be a potential catalyst opportunity with respect to this particular program that investors/traders can possibly look forward too. Alector expects to release data from this phase 1 study, using AL101 in healthy volunteers, in a medical conference later in the 2nd half of 2022. Whether or not the data using this approach ends up being positive remains to be seen, but at least it’s another avenue worth exploring.
Financials
According to the 10-Q SEC filing, Alector Inc. had cash, cash equivalents and investments of $808.9 million as of June 30, 2022. A big reason for the cash on hand is thanks to the partnership deal advanced with GlaxoSmithKline back in July of 2021. Based on that deal, it was able to receive $700 million as an upfront payment for the license rights of AL001 and AL101. It also wants to reacquire rights for another drug known as AL008, which is a CD47-SIRP-Alpha drug for oncology. If it does end up retaining rights, it intends to run this program on its own, which would further increase its spending. Based on the current cash on hand, it believes it could fund its operation into the 2nd half of 2024.
Risks To Business
There are several risk factors that investors/traders should be aware of before investing in this biotech. The biggest risk factor to consider would be with respect to the entire Alzheimer’s Disease program. The reason why I state that is because the failure rate for such studies is very high. Matter of fact, about 99% of these AD drugs fail to achieve statistical significance in clinical trials. A second risk factor to consider would be the ongoing partnership Alector has with AbbVie and GlaxoSmithKline. Even though AbbVie has chosen to stay with Alector for development of AL002, there is no guarantee that it will continue to do so. I would say that the good news is that even if AbbVie were to cut ties, I don’t think it would do so until it saw final results from the INVOKE-2 phase 2 study. Results from this particular mid-stage study, using AL002 for the treatment of patients with early AD, are not expected to be released until 2024. Regardless, unsuccessful results would not only mean the cutting of the use of AL002 for AD, but also a loss in the ability to be able to generate additional milestone payments as well. In addition, the partnership with GlaxoSmithKline based on the use of AL101 for AD, rests on positive data. The good thing is that Alector has not just established a partnership with GlaxoSmithKline for AD only, both companies are also advancing AL101 for Frontotemporal Dementia and ALS.
Conclusion
The final conclusion is that Alector Inc. is a great speculative biotech play to look into. While it is diving into several studies in the very risky AD drug treatment area, I like that it has several different approaches in targeting it. In particular, I like that it has achieved a first in the clinic with the use of AL044. It is the first AD drug being advanced in the clinic to target MS4A. Not only does this offer a unique approach, but it offers insight into another potential pathway in possibly being able to treat AD. There is also a small catalyst opportunity, in that Alector intends to submit some early results from a phase 1 study using AL101 for the treatment of patients with AD in the 2nd half of 2022 at a medical conference. The hope is that there is some positive safety and biomarker data to guide this program forward as well. The premise for looking into Alector is that it has three shots on goal in targeting AD, which is a very large market opportunity should be successful. Despite this being a hard to treat disease, the company has other drugs being advanced in the pipeline for other indications. I already made note of AL001 for Frontotemporal Dementia above in the risk factors subsection, plus the other good asset which I believe could offer great potential as well, which is AL008. Again, AL008 is the CD47-SIRP-Alpha immuno-oncology drug. The bottom line is that there are many other opportunities in the pipeline if none of the AD disease drug programs end up being successful.
Be the first to comment