Good afternoon, ladies and gentlemen, and welcome to the Alector Second Quarter and Midyear 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call 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 second quarter 2025. The press release is available on our website at www.alector.com, and our 10-Q 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. Giacomo Salvadore, Chief Medical Officer; Neil Berkley, Chief Business Officer and Interim Chief Financial Officer; and guest speaker, Dr. Ryan Darby, Associate Professor of Neurology and Director of the Frontotemporal Dementia Clinic at Vanderbilt University Medical Center as well as a paid consultant to Alector, who will provide clinical context on frontotemporal dementia. 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, and good afternoon, everyone. As we enter the second half of 2025, Alector is approaching an important inflection point. By mid-fourth quarter, we expect top line data from our pivotal Phase III INFRONT-3 trial of latozinemab, our most advanced clinical program. This trial represents the first rigorous test of progranulin elevating approach to treating frontotemporal dementia due to the GRN gene mutation, a fatal and rare form of dementia that strikes people decades earlier than Alzheimer's disease and currently has no approved therapy. We designed latozinemab based on clear biological and human genetic rationale to elevate progranulin levels by blocking its internalization and degradation by sortilin receptor. FTD-GRN is directly caused by progranulin deficiency and restoring it has the potential to alter the course of the disease. Our earlier studies in participants with FTD-GRN provided encouraging signals, both in biomarkers and in clinical progression. INFRONT-3 will allow us to determine whether those findings hold up in a larger placebo-controlled double-blinded trial. Together with our partner, GSK, we are advancing [ launch readiness activities ] to help ensure we are well positioned to support the potential commercialization of latozinemab. Additionally, we are also excited about our late-stage clinical program in early Alzheimer's disease, where we are advancing AL101, our second progranulin elevating antibody, which is currently in Phase II trial. There is a strong genetic and biological rationale for the role of progranulin in Alzheimer's disease. Loss of function mutations in progranulin have been shown to increase the risk of Alzheimer's disease in humans, while overexpression of progranulin has been shown to be protective in animal models of Alzheimer's disease. Enrollment of this Phase II trial was completed in April and trial completion is expected in 2026. AL101 shares a similar mechanism with latozinemab, but its pharmacological properties…

Thank you so much for the kind introduction. Today, I'll be providing an overview of frontotemporal dementia, or FTD, which is a complex and devastating group of neurodegenerative conditions that impact thousands of individuals and their families worldwide. We'll touch on its subtypes, the clinical progression, the genetic drivers like FTD-GRN and the current and future landscape of treatment and diagnosis. FTD is not a single disease, but instead a group of disorders caused by progressive neuronal cell loss in the brain's frontal and temporal lobes. This neurodegeneration leads to a broad range of symptoms, and we categorize FTD into different clinical subtypes based on those symptoms in the areas of the brain that are affected first. First, we have the behavioral variant FTD or BVFTD, which is the most common form. It's characterized by striking changes in personality and behavior such as apathy, impulsivity and socially inappropriate behaviors. Next, there is primary progressive aphasia or PPA, which primarily impacts language. In FTD, this is further subdivided into 2 main subtypes, the semantic variants where individuals lose their understanding of word meaning and the non-fluent variant where speech becomes halting and effortful. Finally, we have FTD that presents with motor or movement-related symptoms. And this can present with overlapping conditions such as progressive supranuclear palsy, or PSP, cortical basal syndrome or CBS, and ALS FTD, which combines features of motor neuron disease with FTD. These clinical presentations fall under the broad umbrella term frontotemporal lobar degeneration, or FTLD, which is the pathological term reflecting that underlying biology. FTD is most commonly associated with the buildup of 2 key proteins, TDP-43 and tau. However, determining which protein is involved in a living patient is extremely difficult unless there's a known genetic mutation or after death at a postmortem examination. FTD itself…

Thank you, Dr. Darby, for that insightful overview of the clinical realities and urgent unmet need in frontonemporal dementia. Your perspective helps frame the importance of our work as we approach the INFRONT-3 data readout by mid-Q4. As Dr. Darby noted, FTD-GRN accounts for approximately 5% to 10% of all FTD cases. This represents about 8,000 to 17,000 cases in the U.S. and EU alone. It is striking how many people living with FTD still have no approved treatment options today, underscoring the need for continued innovation and urgency in this field. With this context in mind, I want to provide a deeper overview of the science behind our approach, the data we have generated to date and how our pivotal Phase III INFRONT-3 trial is structured. Latozinemab is a novel investigational human monoclonal antibody developed in collaboration with GSK, and we believe it is the most advanced therapeutic candidate in development for FTD-GRN. We have evaluated latozinemab in both Phase I and Phase II clinical studies. In Phase I, the treatment was well tolerated in healthy volunteers and dose-dependent increases in plasma progranulin were observed. Our open-label Phase II INFRONT-2 study enrolled 12 participants with symptomatic FTD-GRN. Treatment with latozinemab normalized plasma and CSF progranulin levels, resulting in a two to threefold increase that was rapid and sustained over the course of treatment. We also assessed a panel of disease-relevant biomarkers, including neurofilament light chain, NfL, glial fibrillary acidic protein GFAP and markers of lysosomal function and neuroinflammation. These biomarkers moved in the direction consistent with slowing disease progression. On the clinical side, we used the CDR-NACC-FTLD-SB a validated scale for FTD that captures cognitive, functional, behavioral and language changes. In a blinded propensity match comparison to participants from the GENFI2 natural history study, treatment with latozinemab was associated…

Thank you, Giacomo. As you've heard today, we are advancing our late-stage clinical programs, which have a strong scientific rationale, robust trial designs and meaningful regulatory engagement. In parallel, we are advancing a research and preclinical pipeline that reflects Alector's long-term vision. These programs are grounded in the same principles that define our clinical portfolio, a strong genetic and biological rationale and high transformational potential and a focus on serious neurodegenerative diseases with first and best-in-class therapeutic approaches. A key enabler of our preclinical and research programs is our proprietary electrobrain carrier. Delivery of sufficient drug to the brain remains a challenge for targeting neurodegenerative diseases. Our ABC platform is a versatile blood-brain barrier transport technology that allows us to efficiently deliver a broad range of therapeutic modalities into the brain. These include antibodies, proteins, enzymes and siRNA. By selectively applying the ABC platform to drug cargoes where enhanced brain delivery can address known limitations of efficacy or safety, we believe we can expand what is possible in the treatment of neurodegenerative diseases. Our preclinical programs include a brain-penetrant anti- amyloid beta antibody for Alzheimer's disease, where a significant unmet need remains despite the approval of anti-amyloid beta antibodies. These approved antibodies have delivered plaque clearance, but only modest clinical benefit, and they are associated with side effects such as amyloid-related imaging abnormalities, or ARIA, which limit their use. As a result, the field is increasingly focused on brain-penetrant anti-Aβ antibodies that aim to increase efficacy, reduce the incidence of ARIA, enable subcutaneous delivery and the possibility of prevention therapy. Our anti-amyloid beta antibody, ADP 037 ABCis designed to deliver on these goals. It combines a validated anti- Aβ epitope, a tailored Fc region supporting robust plaque clearance and our proprietary brain delivery ABC platform. While an emerging brain-penetrant anti-amyloid…

Thank you, Sarah. As summarized in our second quarter 2025 financial results, which we made available after the market closed today, we are in a strong position to deliver against our strategic objectives. We closed the quarter with $307.3 million in cash, which we continue to expect will provide runway into the second half of 2027. We have updated our 2025 financial guidance. We anticipate collaboration revenue to be between $13 million and $18 million, our total research and development guidance to be between $130 million and $140 million and our total general and administrative guidance to be between $55 million and $65 million. Our financial position enables us to stay focused on execution across our late-stage clinical, preclinical and research pipeline. 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 Instructions] Our first question comes from the line of Tom Shrader of BTIG.

I just wanted to clarify on the statistical analysis plan, is the only change that you've added progranulin? Or is there something else there? And just give us a sense of why you added that? -- progranulin -- I mean, on average, it normalized, but did it -- does it normalize in every patient in your prior trials? I'm just trying to understand why you're doing this. And then on the ABC portfolio, is it mostly transferrin receptor based? Or are you using other receptors?

This is Giacomo Salvadore, the Chief Medical Officer. The change in our statistical analysis plan to include progranulin as a co- primary endpoint was reactive to a specific request by the FDA by statistical reviewer by the FDA who asked us to make this change to the statistical analysis plan and recognizing the important mechanistic role of progranulin. This is the only change made following a specific comment by a statistical FDA reviewer. Regarding your question about the effect on progranulin in the population of patients with FTD-GRN, we have analyzed plasma progranulin in the Phase II study, and we showed a two to threefold increase in progranulin after treatment with latozinemab. Overall, we -- based on our Phase II data as well as the longitudinal data from observational studies, we feel -- we believe that we have more than 99% power to show a statistically significant effect on progranulin.

Maybe I'll take the question on the ABC platform, Tom. So yes, while we are exploring other transporter-related transport vehicles, our lead programs that we are talking about do depend on the transferrin-mediated process.

Tom, just to add to Giacomo, we are not aware of any case where we treated patients with our drug, and we didn't see elevation of progranulin. So progranulin is consistently being elevated in treated individuals, both healthy individuals and FTD mutation carriers.

Our next question comes from the line of Myles Minter of William Blair.

Yes. Following on from Thomas' first question, why did that reviewer request plasma progranulin? Like this is an antibody. I assume it's largely peripherally restricted with some minimal getting into the brain. I know tapping these patients in terms of CSF and measuring progranulin is probably problematic at this stage. But is that reviewer like are they basically agreeing that plasma progranulin with a largely peripherally restricted antibody driving that upregulation is predictive of functional benefit in a CNS disorder like frontotemporal dementia. That's the first one. And then if Dr. Darby is still on the line, I think INFRONT-3 at its bare minimal was powered to show a 25% improvement in the slowing of cognitive decline in this trial. Just on the background of what we've seen with the uptake of anti-amyloid therapies in Alzheimer's disease showing a 27% slowing of decline. I know there's some safety concerns with that. But if it was 25%, is that still an attractive product to prescribe to this patient population?

So the FDA didn't provide detailed rationale for their input on the analysis plan and the rationale behind their suggested change and elevating progranulin coprimary endpoint. We believe that the FDA input underlines the importance of progranulin as a biologically meaningful marker in FDG-GRN. Mutation in progranulin granulin gene leads to operating insufficient and is a known case of the disease. Another point to underline is the fact that we had prior discussion with the FDA, and we disclosed those in the previous calls. And we had an agreement that elevation of progranulin could serve as confirmatory evidence in our latozinemab program. So this change follows some previous discussion that we have disclosed before. Regarding your second comment on peripheral versus central, we -- in the Phase II study, we were able to show robust increases of progranulin two to threefold, both in the CSF as well as in plasma. Therefore, our previous data indicates a strong effect no matter what the compartment is chosen to study progranulin elevation. Yes, that is a really good correlation with our drug between the serum and the CSF, both in healthy volunteers and in patients and in both of our drugs, both in 001 and 101. So with sort of both of our drugs, the plasma progranulin appear to be a good representation of what actually will also happen in the CSF in the brain.

This is Ryan Darby. I can answer the other questions now is the right time. So in terms of that clinical benefit, I think a 25% reduction would be something that would be meaningful in a disease where we don't have any other therapeutic options. I think in the anti- amyloid infusion comparison, the issues with implementation there, I think, center around the side effects and that cost benefit profile that we're discussing with patients where some patients would opt away from that. I think in FTD with no other viable treatment options, there would be more of an interest in that would obviously depend on the other side effect profile and what that looks like. Yes. So far, sort of our drug appears to be very well tolerated. There are no sort of meaningful drug-related adverse effect. So it will be with regard to safety, a different -- appear to be a different profile than the anti- Aβ therapeutic.

Our next question comes from the line of Alec Stranahan of Bank of America.

One on AL001 from us as well. Curious how changing the SAP at this stage could affect powering on the modified CDR sum of boxes since plasma PGRN is now co-primary. And in your discussions with the FDA or and/or GSK, curious if expanded enrollment INFRONT-3 was part of your discussions at all. And given the FDA's apparent focus on PGRN levels, have you gotten a sense whether plasma PGRN could make its way on to the label as well for selection?

So to start regarding our program -- how the change in the to include progranulin as co-primary affects the power or conduct of the study, I can tell you that with having 2 co-primary endpoints, one clinical, is the CDR, FTLD sum of boxes and progranulin, we need to show statistically significance on both co-primary endpoints for the study to be positive. Having said that, these 2 co-primary endpoints are analyzed independently, meaning that the power regarding the CR sum of boxes remain unchanged. And as I said before, regarding progranulin, based on our Phase II data, we have more than 99% power to show a significant effect on elevating progranulin. The other -- sorry, can you repeat the other question?

Yes. Just given the focus of the FDA on plasma PGR, I'm curious if this could be a potential in terms of the population on the label.

Yes. We haven't had any discussions about labeling, and we will entertain discussion with regulators after we have the trial readout in mid-Q4 2025, but we didn't have any discussion about progranulin being as part of the label.

Our next question comes from the line of Yaron Werber of TD Securities.

This is [indiscernible] on for Yaron Werber. Did the FDA mention any particular threshold that they wanted to see for progranulin? Or is that just statistical significance? And then to follow up, you mentioned the 90% power to see a 40% lowering. Was that -- are you tying that in any way to the progranulin levels? Or is that just still the sum of boxes endpoint?

Sure. The FDA didn't specify any particular threshold regarding the elevation of progranulin that they would want to see based on our trial data. They simply provided a comment that they recommended us to include progranulin change as co-primary endpoint. Then the other question was about the powering of the study power for 40% progression with latozinemab versus placebo. And this power remains unchanged after the modification. As I mentioned just now, the [ sum of boxes ] and progranulin are analyzed separately. So the initial assumption regarding CDR remain unchanged, and we -- there is no change regarding the CDR sum of boxes. And progranulin, we are 99% powered based on our Phase II data. So it doesn't -- so we don't think it's going to affect the probability of success overall. But considering the fact that we -- in order for the study to be positive, we need to show significance on both co- primary endpoints.

Yes, I'd like to add again that even if we see 25% slowdown in cognitive decline, this will be statistically significant, clinically meaningful and will most likely be approvable.

Our next question comes from the line of Sean Laaman of Morgan Stanley.

This is Mike Riad on for Sean. Congratulations on completing enrollment for progress. We have 2 questions. First one for Dr. Darby. We'd love to hear your thoughts. Assuming success restoring progranulin to normal levels in FTG progranulin, like slowing CDRS- B, would that increase your confidence in elevating progranulin above endogenous levels like being beneficial to patients with Alzheimer's?

Yes, that's an interesting question. I think that certainly showing that you can modify the level and have a benefit would help support that. I don't know if I would move you all the way to saying that super normal levels would have increased benefit, if I'm understanding that question. But certainly, restoring to normal levels shows that the intervention can do that and if it's associated with the clinical benefit that it can have an impact.

That makes sense. And then maybe just -- sorry, just a quick follow-up. What would be like your view on like other FTD subtypes?

Yes. I mean I think it would definitely make me curious of seeing what that effect could potentially be so that if this is protective, would going even above the normal levels be helpful, I think would open up that possibility or if there is a subset of patients with relatively lower -- even if it's not to the level of progranulin carriers, would that be a good treatment target and then you'd be able to show that there is something that is potentially able to do that.

That's really helpful. And then I guess my follow-up question would be for management. For INFLUNT-3, given the potential for interpatient variability on baseline progranulin level, be it by stage of disease or other factors, be it like semantic or motor disruptions, like how are you normalizing for that? Is it like the FDA requesting like within subject comparison from baseline to study end? Or is it more like an aggregate comparison between study arms?

I can take this one. So we are finalizing the SAP in close discussion with the FDA. And they -- we are going to analyze plasma progranulin change in the active arm versus placebo. So we didn't have any specific request. I can add the fact that haploid-insufficient in the granulin gene is associated with 50% reduction of progranulin levels. And this is enough to produce a disease phenotype, meaning that 50% decrease in progranulin level are almost invariably associated with frontotemporal dementia and development of the full-blown disease. Our previous data showed two, threefold elevation of plasma progranulin and we -- and also CSF data are very consistent with that, and we were able to show normalization of dose level in individuals who had baseline deficit. So Arnon, I don't know if you want to add anything, but it's -- we see a consistently low levels of progranulin in patients with FTDGR and this is a functional mutation which is associated with the disease phenotype.

Yes. Mechanistically, the mutations that cause frontotemporal dementia are full heterozygous lot of function. These are causing mutations that leads to complete ablation of the mutated protein. There's no gradation in the mutated protein. So every individual that has mutations that cause frontotemporal dementia are calling mutations that lead to haploid-insufficiency, like 50% or less of the progranulin. The promoter mutation or actually the 3 prime [ untranslated ] mutations that you referred to are a different class of mutations. These are mutations that are associated with very modest reduction in progranulin of 10% to 15%, and they are associated with other diseases like Parkinson's disease and Alzheimer's disease. And -- but they sort of they don't lead to frontotemporal dementia.

Our next question comes from the line of Graig Suvannavejh of Mizuho.

This is Doug MacPherson on for Graig. So thinking about the relative subjectivity of the endpoints of clinician severity score and the rating scales compared to biomarker data, is there anything that can be done or has been undertaken in orchard to try to minimize perhaps a placebo effect or to optimize for like the spread or separation between active drug and placebo?

The powering of the study take into account also the expected placebo change based on the natural history data and the natural course of the disease. Regarding biomarkers, they are unlikely to show any effect -- any placebo effect because those are objective measures, NfL as well as GFAP and volumetric MRI. There is not -- there is no placebo effect as far as we know. Regarding broadly speaking, the placebo effects on clinical outcome measures, what we know from neurodegenerative diseases is that if placebo effects are present at all, they typically tend to be manifest in the first few weeks of treatment and they tend to dissipate over time. Our trial are the INFRONT study is 96 weeks long and in a disease that show progression over time. So we don't see the placebo effect as a particular risk for this kind of indication.

Sure. Appreciate it. And then a quick follow-up. Should we at all be concerned about ARIA for TRAEs? And if so, what would be sort of an acceptable ARIA prevalence or severity in treated patients?

Yes, you're asking about which program in particular?

I'm still on the FCD Phase III study.

So we are monitoring blinded phase 3 periodically and there is an independent monitoring committee, which oversees the safety of the drug as well, and we didn't have reports of ARIA in the study INFRONT-3. So maybe if I can add one quick thing. Typically, ARIA is observed in Alzheimer's disease and trials and it's associated with the removal of amyloid from the brain, especially from the vasculature. So in the absence of amyloid or when it is not a prominent feature of the disease I think the biological rationale for underlying the physiology is not present. Just wanted to clarify this. So the quite not expected as a feature of this treatment, and we haven't observed it so far.

Our next question comes from the line of Paul Matteis of Stifel.

This is Emily on for Paul. We were just wondering if there was a situation where you were able to hit on progranulin, but the clinical data was a bit more equivocal. How would you feel about your chances that approval in that situation?

Sure. So the study in INFRONT 3 is enrolled 103 subjects with symptomatic FTD-GRN. We collect a number of clinical measures as well as biomarkers, and we will be -- if the data support it, we will be pursuing full approval. Based on the data and given the fact that there are no approved treatments and there is a disease with a very huge burden as Dr. Darby reminded us just earlier, we will be open to have a dialogue with the regulatory authorities and the FDA based on the observed findings, which may include changes in progranulin -- we -- but again, we are meant to pursue full approval if the data supports it. And what we know from the CNS space, the FDA has recently approved drugs based on biomarker findings, if we think about the approval of tofersen in SOD1 ALS. So there are regulatory precedents, especially in CNS diseases, which are rare and with no approved treatment options. But we are pursuing full approval if the data support it.

And then just one follow-up. Were you able in that meeting with the FDA to confirm your sample -- confirm alignment on the sample size again?

Yes, sure. Thanks for the question. So we aligned on the sample size with the FDA in a meeting that we had in 2023, where we performed the blinded sample size reestimation and we observed the lower variability on the primary outcome measure, the outcome of boxes at PLD as we had in mind in our original powering assumption. So we agreed with the FDA that sample size between 90 and 100 subjects would be sufficient to show 40% [ slow disease ] progression in the active arm with latozinemab versus placebo. And we got an agreement with them on the sample size, and we enrolled 103 subjects, so over -- slightly over the number that we think is needed to show a clinical effect.

Our next question comes from the line of Pete Stavropoulos of Cantor Fitzgerald.

This is Samantha Schaeffer on the line for Pete. So a question for the team, Dr. Salvador, Dr. Darby related to INFRONT-3. We know that 16 asymptomatic patients were enrolled who will not be included in the primary analysis. Based on their baseline NfL levels, though and what we know about natural history, do you expect signs of progression and potential differences between [indiscernible] and placebo within the 96 weeks? And then I just have a follow-up question.

Sure. So as you correctly said that the primary population is patients who are symptomatic. So these 103 subjects that I just mentioned. Asymptomatic subjects, 16 of them were enrolled in the trial and will be part of sensitivity analysis. The study is ongoing and remains blinded. So we -- I cannot comment on what we expect or what we -- in terms of the ability to seize an effect in presymptomatic subjects. We will definitely look at the data and part of sensitivity analysis and possibly entertain discussions with the regulators based on the data we observed the results we observed.

Just to add to this, the recruitment of the presymptomatic patients, as you said, based on genetic mutations of frontotemporal dementia and certain threshold level of neurofilament sort of published study suggested that such patients could convert to symptomatic within the 2 years period, but we will have to see what's the actual data of the clinical trial. But that was the original expectations and the rationale for recruiting this group of presymptomatic with high level of neurofilament.

That's very helpful. And just a follow-up. We know that there's a Part 2 of the INFRANT study on -- it's an open-label extension. Can you give us a sense maybe quantitatively or qualitatively how this part of the study is progressing? Is there a high rollover rate into the OLE?

So we haven't disclosed details on how many subjects rolled over into the OLE. As a company, I can say that we are satisfied regarding the number of subjects who are actually opting in to the open-label extension, and we think that it will provide meaningful data about the persistence of the benefit in terms of clinical endpoints and biomarkers as well as what happens in subjects who switched from placebo to active treatment moving to the open-label extension. There are some very interesting and meaningful presence in the CNS space about how this open-label extension data can provide more clarity on the meaningfulness of the results from the double-blind portion of the study. So we are -- we remain interested in looking at the results. But again, the statistical -- I mean, the analysis will be focused on Part 1, which is the double-blind portion of the study, 96 weeks. So we will not focus on the open-label extension for now.

I'm showing no further questions at this time. I would now like to turn it back to Neil Berkley for closing remarks.

Thank you. Before we end the conference call, I'd like to share that Alector will be participating in a number of upcoming conferences, including the 2025 Cantor Global Healthcare Conference on September 4 in New York, the Morgan Stanley 23rd Annual Global Healthcare Conference on September 8 in New York and the H.C. Wainwright 27th Annual Global Investment Conference on September 9 in New York. Thank you again for your time and attention. We will now conclude today's call.

Thank you. This does conclude the program. You may now disconnect.