Collaboration Announcement

Jul 2, 2021

Press Release

Ladies and gentlemen, thank you for standing by, and welcome to the conference call being hosted today by Elektra's Management. At this time, all participant lines are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michelle Corral. Please go ahead, ma'am. Thank you, Sarah. Good morning and thank you all for joining us on today's call. I'm Michelle Corral, Elektor's Vice President, Communications and Investor Relations. Today, we are excited to be sharing the details of a collaboration with LaxoSmithKline to jointly develop and commercialize our propranial and franchise programs, AL-one hundred and one and A press release detailing the terms of this collaboration was issued earlier today and is available on our website. Leading today's call is Elekta's CEO and Co Founder, Doctor. Arnon Rosenthal. Arnon is joined today by Doctor. Shneaz Suleiman, Elekta's President and Chief Operating Officer. Following their prepared remarks, we will open the lines for Q and A and Naveen Bazaj, Our Head of Corporate Development and Doctor. Robert Paul, our Chief Medical Officer, will join us to aid in answering your questions. As a reminder, the information discussed during this call will include forward looking statements, which represent the company's view as of today, July 2nd, 2021. We undertake no obligation to update or revise any forward looking statements to reflect new information or future events Except as required by law, please refer to today's press release as well as our filings with the SEC for information concerning risk factors This could cause actual results to differ materially from those expressed or implied by these statements. With that said, I'd like to now hand the call over to our Good morning, everyone, and thank you for joining us to celebrate and discuss our global To the best of our knowledge, this partnership is among the largest that was ever executed in all the generation. Alector was founded on the vision of eliminating neurodegenerative brain disorders by recruiting The brain immune system to counteract multiple novel degenerative pathology. By next year, we will have 7 clinical drugs We concluded profit sharing partnerships that cover the cost of 4 of our programs and retained commercial rights. In addition, we transacted a regional partnership that covered the proof of contract cost of a FIFS program and The collaboration with GSK, as you know, covers I will put progranularine alipatine therapy, AL-one hundred and one. As many of you know by now, progranularine is a Key regulator of immune response, lysosomal function and survival in the brain. People with only one copy of the program in gene Invariably developed frontotemporal dementia. Likewise, genetic mutations that lead to 10% to 20% decrease in the level of ogranulins associated with the risk of developing ALS, Alzheimer's disease, Parkinson's disease and limiting predominant age related Our programming franchise, therefore, addresses a broad range of non degenerative indication. IL-one is already in pivotal Phase 3 clinical studies in symptomatic and presymptomatic STDs for valuing mutation As well as in Phase 2 in symptomatic STD patients with mutation in the C9orf gene. We are also on track to begin our Phase 2 study in ALS later this year. Our AL101 program is being developed for Parkinson's disease and Alzheimer's disease. This program is currently in Phase 1 safety studies in healthy volunteers evaluating both intravenous and subcutaneous With a broad pipeline of preclinical and clinical drugs and multiple profit sharing partnership, We continue our quest to cure node generation as a fully integrated biotechnology company. Shneur Stouhriman, our President and Chief Operating Officer and the key architect of the GSK agreement, I will now walk you through the strategic rationale and terms of the business. Sheena? Thank you, Anand, for that introduction, Good morning to all of you who have joined us for today's call. We are very pleased to announce this collaboration with GSK. The substantial nature of the deal and collaboration provides great validation to our immuno neurology scientific approach and the potential impact that the pro granuline franchise programs can have in a broad population of patients living with neurodegenerative diseases. I'd like to walk you through the strategic rationale and the terms of this partnership, which we view as a win win for both parties. Firstly, the collaboration allows us to expand, accelerate and fund the development of our pro granulins franchise. With this collaboration, we're able to expand the development of AL-one and AL-one hundred and one into a broader range of neurodegenerative diseases, including FTD, ALS, Parkinson's and Alzheimer's disease, and also pursue these indications Globally, more expeditiously than we would otherwise be able to do on our own. The upfront payments and milestones Fully fund the development costs associated with this expansion into these broader indications. Secondly, we're able to participate and retain Financial upside. We have the potential to benefit from downstream value creation via profit share in the U. S. And high tiered royalty outside the U. S. Thirdly, the partnership accelerates our transition to be a fully integrated company and commercial organization. We are able to lead commercialization in open indications in the U. S. And have the option to co promote in bigger neurodegenerative diseases should we choose to do so, enabling us to establish a focused commercial footprint in the U. S. Fourthly, it leverages GSK's global late stage development, regulatory and commercial capability, we have a science driven partner Committed to immunology and genetics with a proven track record of bringing novel treatments to market in an accelerated manner. Turning now to the specific deal terms also described in this morning's press release. GSK has granted an This is a worldwide license to the Progamulin franchise program, AL-one and AL-one hundred and one. Elekta will receive a total of 700,000,000 in upfront payments. Elekta will also be eligible to receive a further $1,500,000,000 in potential development, Regulatory and commercial launch related milestone payments. We will lead and fund the Phase 2 studies for all indications. Alector and GSK will co develop and co fund the Phase 3 studies at a rate of 60% GSK, 40% Alector in terms of the cost shape. In the U. S, Alector will lead commercialization in orphan indications And GSK can co promote up to 50% on the orphan indication. Reciprocally, GSK will lead the commercialization of large indications such as Alzheimer's and Parkinson's disease in the U. S. With Alector being able to co promote up to 50% on these indications. GSK will lead commercialization outside the U. S. GSK and Elektor will have a fifty-fifty profit share arrangement in the U. S. And ex U. S, GSK will pay Alector tiered royalties ranging between 20% 24% on net sales. We are very pleased with the structure of this agreement. We believe it reflects the value of the franchise and provides us with optionality and flexibility to execute a comprehensive development program to explore the broad potential of We maintain an important role and control in the execution of these programs. We have a significant stake in future commercialization and share the upside, and we can do so alongside a partner that is fully aligned with our vision. In addition, we are able to continue our quest to build a fully integrated company. Ultimately and most importantly, we believe this will allow us to translate the promise of this biology into therapeutics Now we'd like to open the line to your questions. As a reminder, joining me for the Q and A are Anand Rosenthal, our CEO and Co Founder Robert Pool, our CMO and Naveen Visaj, our Head of Business Development, all of whom are intimately involved in the execution of this transaction. Operator, over Our first question comes from the line of Matthew Harrison with Morgan Stanley. Your line is now open. Great. Good morning. Thanks for taking the question. I guess 2 for me. 1, can you just comment on whether GSK has seen or to the extent that they have seen the data that you're going to be presenting at AAIC and how important that was in terms of Their decision about this partnership. And then secondly, maybe could you just give us some, I guess, practical examples of the potential acceleration in non TD indications in terms of how much quicker we might get data or how much larger some of your sort of interim studies in terms of signal finding might be? Thanks. Thank you for the question, Matthew. So first and foremost, a thorough due diligence process was conducted as part of the deal process, as you might expect. And we continue to look forward to sharing the data from the ongoing Phase 2 study at AAIC. With regard to your second question, clearly what this allows us to expand into indications that we have been quite thoughtful about doing, but in a more And those indications include either move the ALI study is already about to start, but also Starting proof of activity or proof of concept studies in Alzheimer's and Parkinson's disease. So I think that the broader indications in particular are Thank you. Our next question comes from the line of Greg Suvannavejh with Goldman Sachs. Your line is now open. Yes, good morning and thank you for taking the questions and congratulations on the new partnership. I've got several. Maybe the first, if I could just maybe follow-up on Matt's question Around expectations for the data at AAIC, assuming that a thorough diligence process was done, To me infers that indeed GSK has seen what that data looks like and certainly was comfortable enough with moving forward due to the transaction. So I just wanted to just get a confirmation of that. And then maybe my Second question has to do with, has it always been a view that you would partner 1 And 101 or is it part of just an evolving thought around the opportunities with those two assets? And then a third question, if I could, is as we look at your pipeline now, most of your most advanced assets Are either partnered with GSK or AbbVie. So looking at the proprietary pipeline, could you point us to the assets or assets that you feel that we Should next from an Elektor proprietary pipeline perspective be paying most attention to? Thanks. Hey, Greg. Thank you. Thank you for those questions. As we said, a thorough due diligence process was conducted on both programs and the AAIC, we look forward to presenting the 12 months data. Robert, I don't know if you want to comment on that. Yes. As we mentioned also at our Progrinolim Day a couple of weeks ago, We're going to present 12 months data in up to 12 patients that includes safety, TKBD biomarker data, target engagement, downstream biomarker like lysosomal function complement Volumetric MRI and I think most importantly, also clinical outcome. We cannot actually speak of course now about these data And because they're under embargo, but we're looking forward to present the data at AIC in July 2019. Thanks, Robert. With respect to your second question about the partnership, we believe this is the right collaboration For us to undertake at the right time for Alector to accelerate the franchise, we are already well underway as you're aware with the FTD pro granulins Phase And this is really an opportunity in time to continue to explore the biology of these programs across multiple indications. So we are feeling confident that the ability to do so essentially cross tracks our overall global development program as well as Our growth as a company, as we continue to move into late stage development and also anticipate in the future the ability to build a commercial franchise. And then, Alan, would you like to comment on the pipeline? Yes. For the pipeline question. First, our partnerships It allowed us to retain fifty-fifty profit share and commercial rights. So we did not really give up any of our We have basically covered the cost for their development, but we see retained very significant upside potential. And this is the strategy that we are going to continue to pursue. It means we prefer to develop additional drugs and Share the cost and the upside rather than develop a smaller number of drugs on our own. But by next year, we are going to have 3 additional programs in the clinic. We have another exciting Alzheimer's and older generation target, the MS4A4A, We have protein, which is a unique listing for Alzheimer's disease. We fully own this program. We will have a multi siglec inhibitor For cancer, and we have a third program that's going to the clinic. So we have a very broad pipeline of fully owned programs that we are Okay. Thank you. I'll jump back in the queue. Thank you. Our next question comes from the line of Geoff Meacham with Bank of America. Your line is now open. Hi. This is Alex Hammond on for Jeff Meacham. Can you guys hear me? Yes. Great. Thank you. So any plans for additional capital, whether that be in the large pipeline or maybe Sorry, would you mind repeating the question? I'm not quite sure we got that. Yes, sorry about that. Any plans for the additional capital that you have freed up now that you have the big collaboration? Would you focus on your pipeline or maybe Other modalities outside of antibodies? I see. Thank you. It's a great question. I would say that we're very excited about The collaboration fully funds the global development of the pro granuline franchise, which does indeed allow us to We continue to exploit the rest of the pipeline, and we intend to do so. We have a number of risk genes that Our targets for potential therapeutic development, as you may be aware, now we can use the rest of our resources to fully Perhaps even accelerate our research pipeline, which is part of the goal now that the Prograglion program Continue to be fully funded. So we are excited about the overall company build thesis that this deal allows us to do, Because now we have again just a plethora of resources to apply, not just across the pro granulant program to expand into new indications, But also to really continue to accelerate the potential of our research pipeline. Hold on, I don't know if you wanted to add anything. Yes. With regard to drug modalities, we are fundamentally agnostic to the drug modality. We are really focusing on the Human genetics and immunology and node generation. So we are constantly exploring additional drug modalities and at the right time we will Thank you. Our next question comes from the line of Nina Bittredegard with Citi. Your line is now open. Hey guys, thanks for taking the question and congrats on the deal. So my first question is just around, it sounds like it was a pretty Kind of a thorough diligence process. I'm just kind of curious what attracted you to GSK specifically. That would be my first question. And then Just curious around what would be potentially kind of the next milestone payment from this collaboration? Would that be Kind of starting a Phase 2 study for AL101 or if you could give us any sense of when we could expect to kind of see the 1st milestone payment So first, this was a very competitive Process and we sort of selected to work with GSK because GSK is giving us sort of A very strong control over our destiny. We are developing orphan indications all the way to approval with 1. We are developing the proof of concept for the large indications Alzheimer's and Parkinson's disease on our own. So we have very significant control over the program. We are not dependent on any third party to advance that. In addition, GSK He's really sharing with us the vision of using immunology and genetics to develop drug and we've So, I've known Albaron for many years and we really trust the motivation, the ability to take Risk on another mechanism of action and we genuinely found GSK to be our ideal partner to develop this novel drug. Correct. And I might add on that, 1 and 101 are going to be flagship programs in GSK's neuroscience portfolio. They have an early research portfolio and this will significantly advance their portfolio. In addition to I think what Anand said, I would just underscore They are a global development partner with operations, regulatory and commercial expertise and Market access capabilities that we spent to benefit from as well. And then Nina with respect to your second question, Those $1,500,000,000 in milestones are largely actually clinical and regulatory milestones Rather than approval milestones, so we expect those milestones to start hitting just as soon as we get going on the overall Thank you. Our next question comes from the line of Yaron Werber with Cowen. Your line is now open. Great. Thanks so much. I got a couple of questions. Maybe Robert for you one. The data that we're going to see at AAIC in up to 12 patients, Is it going to be 12 patients at 6 months? And if I recall, is it 9 patients at 12 months? Is that sort of the way we should think about it? And then secondly for 101, you're testing both IV and subcu. Any initial thinking whether you can formulate The subcu was the formulation then itself and dosing as well. Thank you. Yes. So we We'll show 6 12 months data. We have clinical outcome data, CDR, some of the boxes of 9 patients at 12 months. And we have also CSF data from 9 patients that if we actually we have from more patients Other assessments, because some patients were not able to come to the site and so some of the assessments were not done in all patients, But the overall analysis actually includes data from 12 patients to 9 patients from 9 patients we have core data 12 months. Hi, Eivian. It's Pugh. Yes, as you know, we're We're going to complete the Phase 1 study in 101 and we're going to actually present the data of this trial end of this Actually the poster of CITAD was just accepted yesterday. So there you get a first impression how about the TK and PD data of 101 and also the subcu availability. We're still Adding more cohorts to this study and once we have the complete data sets, we will make the decision exactly how the dose and the dose Thank you. Our next question comes from the line of Tom Schroeder with BTIG. Your line is now open. Good morning. Congratulations. It seems I can't say I'm surprised at this deal. On the big market indications, can you flush out the structure? Are you going to do a full Phase 2 program And then there'll be some sort of joint steering committee for Phase 3 or are you pretty committed to Phase 3 already and you think it will be mostly And then a follow-up question on that. Are you sure what you're going to do in Parkinson's and Alzheimer's? Is it going to be an all comer program or do you think you might be looking for subgroups based on some of your early data? Thanks. Thank you, Tom. So in terms of the collaboration, this is we have a Joint governance structure, which is pretty customary for a deal of this type. And secondly, I would say that the way the actual control and Works with respect to the studies is that we conduct the initial Phase 2 studies All of the indications and in particular the larger indications. With respect to the overall global development strategy, we Very fortunate in that we have completely aligned with GSK on our overall approach in PD and AD. As is consistent with our approach, we prefer to start to generate proof of activity data in genetically stratified patient And so for example, in PD, we have in the past talked about PD GBA1 as the signal seeking patient population To conduct the initial Phase 2 study and then would follow that with a more kind of traditional Allcom is patient development strategy in PD. Robert, I don't know if you wanted to add anything. Yes. So The strategy is basically to figure out where the science will lead us, what is the best patient population. So this is also the goal of the Phase 2 studies To make sure that we actually select the right patient population and based on that we will decide how to conduct the Phase 3 studies. Got it. If I just follow-up quickly, in Alzheimer's, do you expect it's likely to be an abeta positive population or might there be some subpopulation that Only you could tackle. Yes, actually similar. The Phase 2 study as a proof of concept We'll probably go broader, but we will stratify patients appropriately and then based on our analysis, we're going to decide How to go forward in the Phase 3 study? Great. Thank you, Bert. Yes. As you know, progenolins mutations for polyamorylinsulin in progenolins is a risk for Alzheimer's disease and About 30%, 35% of the population carry this risk mutation, both with Parkinson's disease and Alzheimer's disease. So that's also something we are looking at. Thank you. Our last question comes from the line of Paul Matteis with Stifel. Your line is now open. Hi, this is Katie on for Paul. Thanks so much for fitting in my question. I guess to follow-up on a previous question, from a timing perspective, when should we expect updates on Prioritization of earlier stage assets or perhaps, assets from the research pipeline. Thank you so much. Hi, Katie. Our goal is to continue to provide updates periodically, much in the way that we have With the KOL event that we hosted recently, so there'll be an event around the time of AAIC with the data and then later in the year we'll We'll be providing more of a pro granular and franchise update and then sometime next year we'll continue to provide more of a broad based pipeline update. And so I would suggest you just stay tuned as we continue to flesh out our overall strategy with respect to the rest of the pipeline. We have talked about follow on programs such as the MS4A4A program, a master regulator of microglia, which we're very, very excited And that program will enter the clinic sometime next year. And so that as well as other research pipelines that have Programs that have been undisclosed will be coming and we'll provide that update in the first half of next year. Great. Thank you so much. Thank you. We do have a follow-up question from the line of Greg Suvannavejh with Goldman Sachs. Your line is now open. Thanks for the follow-up. I just wanted to see if I can tackle a modeling question or 2. Just in terms of the milestones, can you just Guide us on the breakout between the 2 programs if they're evenly split or if there's some split that we should keep in mind. And then in terms of the upfront payment, should we just assume that will get amortized over a certain period? And if you could Help us think about the length of that period? Thanks. Yes. Hi, Greg. This is Nadeem. Great question. So maybe I'll talk about your 2nd part first that the yes, the upfront payment you can just assume is going to get amortized over a certain period. As Shneur has mentioned, This was really dedicated to the Provenuant program and self funding the deal. So that's where a lot of those resources will go to. And then the first part of your question on the milestones, yes, it's a fairly even split between 1 and 101. Given 101 is for the larger indications, You can see some of the milestones for that one will be a little bit larger compared to 1, which is in orphan indications. Okay. Thanks for that added color. Thank you. We do have another follow-up from the line of Jon Werber with Cowen. Your line is now open. Thanks. I think you just answered some of the question, Navin. Just so we understand correctly, so it sounds like 1, you will not take that into orphan indications at all, including no preliminary POC, right? All POC For broader indications, it's going to be done with 101 only. Thank you. Yes. Yaron, let me just yes, sorry, let me just clarify. So the 1 is And for orphan indications and our AL-one hundred and one program is the one we'll be taking to non orphan indications specifically Parkinson's disease and Alzheimer's disease. Yes, Yaron. Our overall strategy with 1 has not changed. We continue to reserve that molecule for orphan indications such as FTD, pro granulins, C9orf and idiopathic FTD, as well as the ALS study, which will commence in Q3 is also with AL-one. AL-one hundred and one because of its potential to be used subcutaneously is therefore reserved for larger indications such as Alzheimer's and Parkinson's. So This is basically a 2 molecule strategy in the franchise based on differences in formulation. So that part of the strategy hasn't changed. And again, the milestones and clinical milestones and clinical milestones are equally split across those molecules, but The value of these milestones are weighted more towards the ultimate and Parkinson's indication. But overall, more than 80% of these milestones Before approval. So they actually are intended to really incentivize and continue to fund the overall development program all the way through approval. Thank you. There are no further questions. I will now turn the call back over to Shneal Subbuhman for closing remarks. Thank you, operator. Thank you to everyone for joining us today to discuss the collaboration with GSK, which really does allow us to accelerate and And the development of our pro granulone franchise. We are proud of what we have accomplished with the AL-one and 101 programs thus far, And we look forward to building on that momentum with this collaboration. As a reminder, we will be presenting data from our Phase 2 study of AL-one In patients with symptomatic FED at the upcoming Alzheimer's Association International Conference, as Robert said, that takes place in Denver at the end of this month, which will provide an opportunity for us to share 12 month safety, PKPD, biomarker and importantly clinical outcomes data on patients. We look forward to sharing those data with you and we plan to host an investor call in conjunction with the data announcement. So thank you again everyone for joining us. We wish you have Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.