Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Alector with co-founder and CEO, Arnon Rosenthal. Welcome, Arnon.
Thank you.
For those who may not be familiar with Alector, can you provide a brief introduction?
Sure. So Alector was created about 10 years ago with the purpose of developing a novel therapeutic strategy for neurodegeneration. So instead of going after misfolded proteins, which is what is the prevalent approach, we are recruiting the brain-specific immune system to counteract multiple disease pathologies. The scientific rationale for this approach is human genetics. In the last 10 years or so, multiple novel genes that increase the risk, for example, Alzheimer's disease, have been identified. And the surprising finding of this human genetics was that the majority of these genes are genes that are specifically expressed in the brain immune system. They regulate survival, proliferation, migration, and function of this cell type.
So even though neurodegeneration and specifically Alzheimer's disease are diseases where nerve cells are dying and connections between nerve cells are destroyed, the genetics tells us what causes this disease or what facilitate the diseases is dysfunctional immune system. So what we do, we really use genetic risk genes as levels to recruit, rejuvenate, repolarize, re-educate the brain immune system to counteract multiple disease pathologies. We view the immune system as the healthcare, the National Guard, the police force of the brain. And what the genetics tell us is that either because of aging or because of genetic mutations, the police force in the brain stopped functioning, and then a lot of things go wrong. Imagine what happened if you remove the police force from New York City.
There's gonna be a lot of crimes happening, but the common denominator is that there is no law enforcement, and this is what we think happens in the brain. In the absence of the immune system, a lot of random things occur, like misfolded proteins accumulate, and myelin is not replaced, synaptic connections between nerve cells are, are not replaced, the supporters are not functioning, the vasculature starts to leak. A lot of bad things happen, and we think that by recruiting the immune system, we can repair most, if not all of these pathologies.
Great. But before we dive into the pipeline programs, can you talk about the blood-brain barrier technology and how it's different from what others are doing?
Sure. So as you know, the brain has a barrier that prevent large molecules from entering from the blood or from the serum. So all our drugs are antibodies. They are large protein molecules. Their ability to penetrate the brain is pretty limited. But so far, we have three drugs in late stage clinical phases, and all of them appear to enter the brain in sufficient quantities. But despite that, we and others are developing technologies to improve the transport of proteins to the blood-brain barrier. Everyone is...
Or most people are using either the transferrin receptor, which is expressed on the endothelial cells in the blood-brain barrier, as Trojan horse, basically to take a ride to hitchhike on the transferrin receptor that brings iron to the brain, to transport large molecules, or other carriers that transport essential minerals or proteins to the brain. We fundamentally are doing the same thing, but we have three different carriers that we are using. We have a very large flexibility in how we can optimize the brain carrier technology to the specific target with regard to affinity, with regard to how we link the carrier to the specific drug.
So, our technology's main feature is that it has very high degree of flexibility, optimize the affinity, optimize the valency, and optimize the configuration of the interaction between the drug and the blood-brain barrier technology.
Great. Well, let's start with latozinemab. Can you talk about the biologic and genetic rationale for targeting progranulin in different neurodegenerative diseases?
Sure. So, latozinemab is a drug that elevates a secreted protein called progranulin. Progranulin is an immune regulatory molecule, as well as a survival factor for nerve cells, and in addition, it's also an enhancer of the lysosomal organelle. The lysosomes are really the organelles that process and degrade misfolded proteins, for example. And progranulin has very strong genetic links to neurodegeneration. In humans, there are three types of mutations in the progranulin gene. There are people that have no functional progranulin at all. These people develop dementia and neurodegeneration, blindness, seizure, they are teenagers, and they have very short lifespan. There is another group of individuals that have one good and one bad copy of progranulin. These people make 50% of the normal level of progranulin, or sometimes even less.
They invariably develop another disease called frontotemporal dementia. Frontotemporal dementia is an early onset type of dementia. It hits people under the age of 60, and it's up to threefold faster and more aggressive than Alzheimer's disease. There is a third class of mutations. These are regulatory mutations in the progranulin gene that reduces progranulin by 10%-15%, and this modest reduction is enough to increase the risk of developing Alzheimer's disease, Parkinson's disease, ALS, or another prevalent neurodegenerative disease called LATE, which is a dementia that is associated with TDP-43 pathology instead of Aβ and tau. Loss of function of progranulin invariably lead to neurodegeneration. We developed two drugs that elevate progranulin, and the way they do it is by blocking a degradation or re-uptake of progranulin.
Conceptually, our drugs are very similar to the SSRI, neurotransmitter reuptake inhibitors like Prozac, that prevents the reuptake of neurotransmitters, and by that increase the level of neurotransmitter in the brain by 2- to 3-fold and basically lead to therapeutic benefit. Our drug is doing the exact same thing. It prevents the reuptake and degradation of progranulin, and by that it increases the level of progranulin by 2- to 3-fold in the brain and serum. And we think that this elevation of progranulin could be therapeutically beneficial for multiple diseases because of the human genetics. So we started with frontotemporal dementia, which, as I said, a subset of this disease, people have genetic mutations, which lead to one good and one bad copy of progranulin. We are in phase III in this patient population.
We are sort of about to complete recruitment this year, and sort of recruited between 90 and 100 patients, and we think that that will be plenty to see therapeutic benefit. As you said, we are developing progranulin-elevating drug for other disorders because both human genetics shows that even modest loss of function of progranulin leads to increased risk. And conversely, animal models for Alzheimer's disease, Parkinson's disease, ALS, show that overexpression of progranulin is therapeutically beneficial. So we are now together with GSK, which partnered with us on this progranulin franchise, we'll be starting a phase II trial in Alzheimer's disease. Again, the human genetics for Alzheimer's disease show that even 10%-15% reduction in progranulin, co...
is, constitute increased risk, and animal model studies show that overexpression of progranulin is therapeutically beneficial. So there are both animal model studies and human genetics studies supporting, elevation of progranulin in Alzheimer's disease. And the same story is also for Parkinson's disease. A progranulin loss of function is a risk for Parkinson's disease, and elevation of progranulin showed to be beneficial in models for Parkinson's disease. So, so we think that progranulin could be, in a way, universal therapeutic agent for multiple types of neurodegenerations, and we are pursuing this together with GSK.
Can you talk about the INFRONT-2 study that you conducted in FTD and what you saw?
So, as I mentioned, we are now in the phase III pivotal study in FTD that is caused by progranulin mutation. Before conducting the phase III, we conducted an open label phase II study in FTD with progranulin mutation. And, since it was an open label, we compared the data to age and disease-matched historical control or what we call digital twin. What we saw based on this comparison with historical control is that first, we were able to elevate progranulin back to normal level after one injection. So, we were able to elevate progranulin from 50% of normal level to 100% of normal level, and this normalization was sustainable for as long as we provide the drug.
So once you provide the drug, you cannot distinguish based on the level of progranulin, whether these patients have a mutant progranulin or whether they have two normal copies of progranulin. The first thing that we are able to show is that we can restore progranulin back to normal level, and there is sort of no adverse effect associated with this restoration. It's a complete enzyme replacement. We replace the missing protein back to normal level. We then looked at multiple biomarkers that are known to be elevated in the disease, and these include lysosomal proteins, these include complement-mediated proteins, and also multiple neurodegeneration proteins like GFAP. We saw that we were able to normalize all these proteins.
For example, GFAP is elevated up to threefold in frontotemporal dementia, and we were able to normalize it both in the serum and in the brain. GFAP is one of the biomarkers that, for example, lecanemab, the anti-Aβ antibody, used to show efficacy. In addition to normalization of multiple biomarkers, we looked at the rate of brain tissue loss using volumetric MRI, and again, compared to age-matched controls, we were able to show that we slow down brain tissue loss. It was most profound in the ventricles, in the open space in the brain, where we were able to show a slowdown of ventricle expansion by 50%, compared to age-matched controls.
Finally, we looked at the rate of cognitive decline, and again, compared to age-matched controls that started from the same cognitive deficits at baseline, we saw after 12 months, a slowdown of cognitive decline of 48%. So overall, the integrated data suggests that our drug is able to really normalize multiple disease biomarkers, slow down brain tissue loss, and slow down cognitive benefits. And again, this was a very small open label study, compared to age-matched control. But if this repeats in our pivotal phase III, we'll have a very profound drug for frontotemporal dementia with progranulin mutations.
You talked about how you're in phase III right now. Can you talk a little bit about that study, and what kind of difference do you need to see in the primary endpoint to be clinically meaningful?
So our current updated study involved early symptomatic FTD patients. We had discussions with both the FDA and with the European regulatory agencies, and we agreed on the clinical endpoint, which is CDR Sum of Boxes, which is tailored for FTD. It has two additional domains compared to Alzheimer's disease. And in addition, again, we are gonna look at volumetric MRI. We are looking at multiple biomarkers. And we agreed on the number of patients that we would need, and it's gonna be between 90 and 100 patients. We already have this number of patients, so we are practically finished recruitment.
And we are looking for, ideally 40% effect size, but we can detect 25% effect size, and we think that 25% effect size is clinically meaningful. There is no complete consensus of what would clinically meaningful be because there are no approved drugs for this disease. But sort of from what we can understand from GSK, even 25% slowdown in cognitive decline would be clinically meaningful. So that's the lower level that we would detect and expect to be meaningful.
Mm-hmm. Now, you're also developing latozinemab for FTD C9orf72. Can you just remind us what you saw in this cohort from INFRONT-2? And then, I guess, given the small sample size and variability in disease progression, it was difficult to interpret the treatment effect, like, what are the next steps for this program?
Yeah. So we currently sort of are focusing on FTD with progranulin mutation. Sort of there is another subset of FTD, which is caused by mutations or by repeats in another gene, C9orf72. In both progranulin FTD mutations and C9orf72 FTD mutations, the hallmark misfolded protein is TDP-43. So we think that there is a lot of mechanistic similarity between the two diseases, and because of that, in our open-label phase II, we run one arm with a progranulin mutation that cause FTD and another arm with C9orf72 mutations that cause FTD. It was a very small study. We always see elevation of progranulin by 2- to 3-fold when we treat patients. And yes, we saw some normalization initially of GFAP and some cognitive decline slowdown in cognitive decline.
But this is, again, a very small study, and we don't think that the data are informative at this point. We are very interested in the indication, again, because of the mechanistic similarity with relation to TDP-43, but we want to see more efficacy data with the progranulin mutation carriers before we advance-
Mm-hmm.
a larger clinical trials with the C9orf mutation carriers.
Right. Great. Well, let's move to AL002. Can you talk about the rationale for targeting TREM2 in Alzheimer's disease?
Yes, absolutely. So TREM2 is a single transmembrane receptor that's expressed only on the microglia immune cells in the brain. It's an activating checkpoint receptor for the microglia. It sense damage, so the ligand for TREM2 are lipids and Aβ and APOE. It's different signals that really tells the microglia that there is a damage occurring somewhere in the brain. And what the TREM2 receptors does, it first it brings microglia to the site of injury. It's a chemoattractant to the site of injury, and then it activates or change microglia to better respond to the injury. It's changed the gene expression profile of microglia. It induces proliferation of microglia, so there are more immune cells that can respond to the injury.
It increases the ability of microglia to phagocytose or to remove, damaged proteins and misfolded proteins, and it's overall, what's called repolarized or change the microglia to better respond to the threat. There is very strong human genetic data linking TREM2 with neurodegeneration. So if you don't have TREM2 at all and you develop dementia at the age of 40, it's 100% penetrance. If you don't have TREM2, you're destined to develop the neurodegeneration. If you have one good and one partially bad TREM2, you increase your likelihood of developing Alzheimer's disease by three- to fourfold, which is the same risk you would have if you have one copy of APOE4, the most famous risk gene for Alzheimer's disease.
In addition to the genetics, there are measurements of the level of TREM2 or soluble TREM2, which is a clipped fragment of the TREM2 receptor, and the relations between the level of soluble TREM2 and multiple aspects of Alzheimer's disease progression. Invariably, what you see is that high level of soluble TREM2, which in our view and the field view, represent high level of TREM2 on the microglia membrane. High level of soluble TREM2 are inversely associated with cognitive decline. High level of TREM2 leads to slow down in cognitive decline, to slow down in the rate of brain tissue loss in Alzheimer's disease, to slow down in the rate of conversion between mild cognitive impairment to Alzheimer's disease, to a later age of onset of Alzheimer's disease, to better survival with Alzheimer's disease.
So basically, every measurable aspect of Alzheimer's disease is beneficially impacted by high level of TREM2. So we developed a drug that basically mimics the human genetics and high level of TREM2 activity. We developed a drug that agonizes, activates TREM2, and again, mimics the human genetics and mimics the high level of TREM2 that you see in sporadic AD. And with this drug, we showed initially in animal models that we can elicit benefit, and this was both in two different models of Alzheimer's disease and in a model of multiple sclerosis. We took the drug to the clinic, and in healthy volunteers, we showed that we can engage the immune system in the brain, and we can elicit multiple biological responses based on biomarkers that are, we think, beneficial for brain health.
Then we took the drug to phase II clinical trial in Alzheimer's disease. So this was placebo-controlled, double-blind study in early, sort of in mild to moderate Alzheimer's disease. We initially planned to recruit 264 patients, but there was incredible interest in the drug and in the program, so we ended up recruiting 100 patients more than originally planned. Like, we recruited over 380 patients. It's a 3-dose arms, placebo, placebo-controlled and low, medium, and high arm. And again, we completed recruitment. We just announced that we finished recruitment last week, and we expected data by the end of 2024. And this drug is partnered with AbbVie.
They have an option deal, and once they see the phase II data, they have 3 months to opt in, and if they opt in, they have to pay $250 million opt-in fees, and then it's a 50/50 worldwide profit share. So just to go back to your original question, TREM2, we think that after APOE4, it's the strongest sort of has the strongest genetic link to Alzheimer's disease, both the genetic form and the sporadic form of Alzheimer's disease. The mechanism of action is very clear. It's an activating checkpoint molecule for the brain immune system, and we have a drug that really mimic the beneficial effect of TREM2, and we will see within a year whether this immune therapy for Alzheimer's disease is working.
So one follow-up question on the phase II that you talked about. Can you just talk about what you need to see to consider that study a success?
Yeah, we are targeting, again, 40% effect size. In the Alzheimer's disease field, the anti-Aβ antibodies sort of got approved based on somewhere between 25%-30% slowdown in cognitive decline over 18 months. So we think that that's the range that you'd have to see. And, again, because of the very broad mechanism of action of TREM2, that we think that, again, recruiting microglia will lead to removal of multiple misfolded proteins, not just Aβ. Will lead to enhancement of neuronal function, of repair of connections between neu- and nerve cells, enhancement of the glial cells in the brain. So we, we, we expect broad activity, which will lead, in our view, to better clinical readouts. But even if we see similar clinical readouts to anti-Aβ, it's still a completely different mechanism that could be combined with anti-Aβ drugs.
So any positive signal, we think, would really change the Alzheimer's field. And again, there is a natural combination with between anti-Aβ drugs and our drug. What anti-Aβ antibodies do, they just mark Aβ plaques, and they recruit the microglia, the immune system in the brain, to dislodge the Aβ plaques. The microglia are really the excavators. These are the entities that remove the Aβ. The anti-Aβ antibodies just mark the site that needs to be removed. And if the microglia is not functioning because of aging or genetic mutations, this combination is not gonna work well. So, the antibody against Aβ mark the site, and we have drugs that enhance the excavator, so there is really a natural combinations between these two classes of drugs.
Okay. Maybe one last question on TREM2. Recently, one of your competitors decided to discontinue its TREM2 candidate, and this was attributed to both the candidate and TREM2 biology. So can you just talk about how this impacts your confidence in the TREM2 as a target, and then what gives you confidence that AL002 has sufficiently wide therapeutic window?
Yes, this does not change our confidence at all. Means we think that the side effects that led to the termination of this trial is completely due to the drug designs, not to the target. Sort of the, because of the drug designs, this company have seen cases of anemia in human, and, the anemia is directly linked to the blood-brain barrier technology that they use. So they use the sort of transferrin receptor to transport the antibody to the brain, and this transferrin receptor technology has been known for 20 years to cause dementia, to cause anemia. We have not seen any anemia case that's drug-related in our drug. Means we treated almost 300 patients for up to, and over 2 years, and we have not seen a single case of drug-related anemia.
It means the only supposedly adverse effect that we saw was ARIA, which is, we think, mechanism-based, and we can talk about it. So basically, we have very strong confidence in this drug. We didn't see... In non-human primates, we went up to 250 mg per kg, which is four times, more than four times higher than our highest dose in human. We didn't see any adverse effects. So we didn't really identify those limiting adverse effects with this drug. So we completely are confident that the adverse effects that were reported are, are due to the drug design, not to the target and not to our drug.
Okay, great. Maybe, one last question is, can you just remind us how much cash you have and the runway that that gets you?
Yes, we have over $600 million in cash. It's gonna run us through 2025 and through the two main milestones, like the completion and data of the phase II with the, in Alzheimer's disease, with the AL002 TREM2 antibody, and the completion of the phase III with AL001 in FTD, with frontotemporal dementia. So we'll have at least two major clinical readouts in major types of neurodegeneration, with this cash.
Great. It looks like we'll leave it there. Thank you so much for your time.
Thank you.