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. [Operator Instructions] 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.

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?

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 targeted 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 3 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 2 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?

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 approximate 100%. Latozinemab is a novel investigational human monoclonal antibody designed to block and down-regulate the sortilin receptor, which 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 1 and 2 trials, with ongoing evaluation in a pivotal Phase 3 trial for which topline data is expected by the fourth quarter. INFRONT-2 Phase 2 open-label study evaluated treatment effects of Latozinemab in 12 subjects with symptomatic FTD granulin. 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 threefold 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 Sum of Boxes, which is an FTD-specific modification…

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 have 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. ADP037-ABC is our proprietary anti-amyloid beta antibody paired with ADC for the treatment of Alzheimer's disease. By leveraging ABC technology, ADP037-ABC 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…

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 31st, 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 million and $15 million. Our anticipated total research and development expenses are estimated to be between $175 million and $185 million, and total general and administrative expenses are estimated to be between $55 million 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.

Thank you. [Operator Instructions] And the first question will come from Pete Stavropoulos with Cantor Fitzgerald. Your line is now open.

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 enroll 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?

Yes. Hi, Pete. This is Gary. Thanks for the question. Good question. So we set out to enroll, as you said, this distribution of 0.5 to 2 on the global score and this was intentional to try to target the early symptomatic population of FTD granulin. And so, as you say, it's always a bit of a balance between trying to treat earlier where we think you know what 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. So 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 CDR2s and we reached that cap and stopped enrollment earlier in about two-thirds or so through the trial and that was intentional because we didn't want to have too many patients or participants that were had been more further progressed and therefore might not be as responsive to treatment theoretically. The other thing I just want to point out is even though that our primary analysis is focused on the symptomatic subjects that we just discussed, we also collected a small cohort of patients who were -- or participants that were -- I'm sorry right mutation carriers and -- but had a certain -- met a certain threshold of NfL neurofilament light and we -- although we're not including those in the primary analysis, we will be looking at those patients with sensitivity analysis in our analysis plan. And that's at least what we're planning to do. And 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 analysis, some benefit in the presymptomatics 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? Thanks for the question, Pete. Go ahead.

So a follow-up on that one. Yes, I actually. So when you do look at the NfL levels of those 16 patients that you enrolled that are presymptomatic and then you look at the GENFI data, are they -- is there an expectation that there's actually going to be progression within those 96 weeks?

Yes. Good question again. So 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 analysis by the GENFI and ALLFTD group has been published, it now looks like the threshold we use might have -- it would be more along somewhere between two and four years to progress to symptomatic. So that was one of the reasons that we opted to focus our primary analysis on the symptomatic subjects. But it's still -- we still expect some of these patients to have progressed and 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.

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

Thanks, Pete.

And the next question will come from Alec Stranahan with Bank of America. Your line is open.

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 may be hard given the different indications? And then second question, I appreciate the new color on the ADC 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.

Yes. So maybe this is Gary. I'll start with answering your first question about AL101 and hand it off to Sara. I don't -- 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. And in this case, we're elevating progranulin, which we believe is going to have effects probably on the lysosomes and whereas the TREM2 was really a very specific approach to stimulate TREM2 signaling that would increase microglial functions in a different way. So I don't think there's much to 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 have a negative study. But so we are -- 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.

And Alec, if I heard your question right, you were asking about 101 specifically and whether 1-3 would be tied to the 101.

I missed that. Sorry.

Am I correct on that, Alec?

Yes, But that, I mean, both is helpful. Thank you.

My mistake. Yes. I thought I heard 2.2. Okay. I'm sorry. Yes, I mean, I think we are looking at those, I mean, look, I think, again, they're different in the mechanism. One is in the case of the 1-3 study, that's the Phase 3 study in FTD granulin. 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 -- but 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. And so replacing it in that event could be protective against Alzheimer's. And there's also a fair amount of animal data suggesting that increasing progranulin levels can be protective against Alzheimer's pathophysiology. So there are a little bit more wings certainly than the TREM2, but in the sense that it's all without progranulin. But we could imagine scenarios where one might be positive and the other -- if one were negative, the other could still be positive.

Great. I think your question was around our ABC preclinical program. So maybe I'll just start and if you need more clarity, you can ask further. But as we said in our press release, we are actively progressing several preclinical programs. Certainly, the most advanced of those are ADP037-ABC, which is our anti-amyloid beta antibody ABC program and the other is ADP050, 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 tau siRNA. These are not as further along as the two programs I mentioned. We also have a Reelin modulator that is designed to block tau pathology and promote synaptic functions in Alzheimer's disease and certainly, at this moment, I mean, if you have any other questions around this, I'm happy to answer.

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

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

This is Emily on for Paul. Just to kind of like 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 like Denali or Roche efforts? And then also just a bit more specifically on ADP037 and ADP050, could you maybe talk a little bit more about the rationale of like selecting those as your first two targets? Thank you.

Yes. I can take that. Maybe, Arnon, you can add. So 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 ADCs, you're trying to maximize efficacy while minimizing the potential of safety of tolerability. And I think our technology provides because it 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. So 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 et cetera. Now coming to our two different programs, ADP037-ABC, which is our amyloid beta technology. We believe that firstly, it targets a validated epitope, which is the PyrGlu3 A 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. And we're 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 ADP037-ABC to have the potential to be a best-in-class molecule in the future. Now ADP050-ABC, 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 a minimal potential to be immunogenic. And ADP050 again paired with our ABC technology really could enable brain penetration and the potential for treatment of Parkinson's disease.

Great. Thank you guys so much.

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

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. And 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? And maybe any thoughts you have about why you took this approach?

It seems that if the field is moving to siRNA from ASO. I mean it seems that if siRNA have more better on-target activity sort of fewer side effects, better stability, but, yes, we are testing it now and we'll 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 ASO versus siRNA, for example, against tau, I mean, there are indications that siRNA is more potent in sort of blocking the target. So it seems that if there are some efficacy advantage as well as safety advantages. But you are right, this is just an evolving field, and we'll see which of the two nucleic acid technologies is better.

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?

I mean the sort of blood brain barrier strategy 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. So 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. And 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 ARIA like adverse effects. So I think there is a lot of interest in the technology. And I think that even though the technology is conceptually simple like to really optimize it and really thread this needle between efficacy and safety is not so easy. And I think there are actually only two or three companies that have the mature technology. So there is still, I think, a lot of demand for the technology.

Yes. Great. Thank you for the color.

Thanks, Tom.

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

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, just remind us how it's powered? And 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.

Thanks, Yaron. Good questions. So the study is powered for approximately 90%, we have about approximately 90% power to detect a 40% slowing of disease progression. And 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 will be a positive p-value. So I hope that answers your question about the power. The second part of your question was?

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

Yes, I'm sorry, right. Yes. So this will include, this will be all of the data. It will 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 the long-term extension for as long as four years.

And also supporting biomarkers as well?

Yes. So in addition to the primary endpoint, I'll remind you that we had a meeting with FDA middle of last year under our breakthrough designation status, where we discussed a number of biomarkers. And it was very encouraging. They agreed that we came to 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 will be considered as confirmatory evidence. And we also discussed a number of fluid and imaging biomarkers that we felt we made the case that should be predictive of clinical benefit. And they also agreed that those biomarkers would be looked at as potentially supportive of clinical data. So I think kind of wrapping that all up, we are feeling optimistic that FDA is going to look at the totality of the data and both clinical outcomes and biomarkers. And that 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. But if for some reason, the unexpectedly, the primary endpoint disappoints, I think, we're going to have a lot of other potentially supportive data that could be give us a backup plan. Thanks, Yaron.

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

Thanks, guys. Thanks for taking the question. So going back a little bit to the preclinical program. Can you just remind us specifically how that PyrGlu3 A beta epitope that you're targeting with 037 differs from both the approved A beta antibodies as well as some of the other ones in development like trontinemab, which does also use a brain shuttle technology and kind of how those different epitopes might lead to differentiation? And could you also just remind us if that 037 uses a TFR or a CD98 mediated brain shuttle system? Thanks.

Yes. So firstly, I mean, let's go to the trontinemab molecule targets the N-terminal region of amyloid beta versus our program ADP037 targets the PyrGlu3 A beta epitope, which actually is similar to the epitope in donanemab and remternetug. And I think the second part of your question, could you repeat the second part of your question, sorry, Sarah?

Yes, sure. So like how might the different epitopes lead to differentiation in terms of targeting potentially different plaque species?

Yes. I mean I think the way we see it is that the -- because we are targeting the PyrGlu3 A beta epitope, which is a validated epitope, certainly, that has been demonstrated as a naked antibody to be effective. And so that's wonderful. As you know, the trontinemab molecule is based is a shuttle-enabled molecule. The naked molecule, gantenerumab was not effective in the clinic. And so I think that bodes really well to using a PyrGlu3 A beta epitope in our ABC construct. And then in addition, as I said, we have a fully active Fc. And more importantly, we fine-tuned our affinity for TFR. I think one of your questions was, are we using TFR, and we are for this molecule. So 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.

Got it. Very helpful. Thank you.

Thanks, Sarah.

[Operator Instructions] And the next question comes from Sam Lee with Mizuho. Your line is now open.

Hi. This is Sam 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 and to generally optimize the trial design in order to give yourself the best chance of success to show efficacy? And 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.

Yes. 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. So I'm sorry about that.

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

Yes. Thanks. So thank you for that. So this was a -- these FTD 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 just, we really just looked with where the patients were. There were -- there are pockets of patients in different countries in Italy and Portugal et cetera and other -- where there are founder effects. We went there. We built 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 presymptomatics at the same time. We found that, as I mentioned earlier, that with more data being collected in the observational studies, GENFI and ALLFTD, we learned a few things over the time when we were enrolling in the study. One is that there was a greater variability of progression in the presymptomatics because they really -- they don't progress very quickly. And for that reason was one of the reasons we decided to focus the primary analysis on the symptomatic subjects that we described. And that was reviewed with FDA and EMA and they were actually both very pleased that we were doing that. And as I mentioned earlier, we'll also still look at those presymptomatics 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. And we've shown in…

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

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

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. Leerink's 2025 Global Biopharma Conference the following week we'll be there March 11th in Miami. And we're 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.

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