Alector, Inc. (NASDAQ:ALEC) Q4 2023 Earnings Call Transcript

Alector, Inc. (NASDAQ:ALEC) Q4 2023 Earnings Call Transcript February 27, 2024

Alector, Inc. beats earnings expectations. Reported EPS is $-0.49, expectations were $-0.8. Alector, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and thank you for standing by. Welcome to Alector’s Q4 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker for today, Katie Hogan. Please go ahead.

Katie Hogan: Thank you, operator and hello everyone. Earlier this afternoon, we released our financial results for the fourth quarter and full year 2023. 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 will 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?

Arnon Rosenthal: Thank you, Katie. Good afternoon, everyone and thank you for joining Alector for our fourth quarter and full year 2023 financial results conference call. I’ll begin by highlighting the broad mechanistic potential of our immuno-neurology candidates. Our candidates include microglia, the brain’s primary immune cells to combat neurodegeneration by containing multiple classes of misfolded protein, maintaining brain health and overall function and supporting the maintenance of healthy synapsis, astrocytes, oligodendrocytes, the blood brain barrier and the vasculature. By harnessing microglia, our candidates aim to comprehensively address the complex pathology of neurodegenerative diseases, potentially providing long-lasting clinical benefits across multiple disease stages.

Our investigational drug candidates have the potential to be effective as standalone therapies or in combination with other treatments, particularly those targeting misfolded proteins. The broad disease fighting mechanisms that our drugs activate as well as the potential synergy between our immuno-neurology candidates and therapies directed against misfolded proteins has the potential to elicit a more potent therapeutic benefit with longer durability and better efficacy at multiple disease stages compared to current therapies against misfolded proteins. As we reflect on the past year, I am pleased to highlight that 2023 was marked by successful clinical execution and clarity around timelines for our advanced clinical development programs. We achieved significant milestones in our late-stage programs, reinforcing Alector’s standing as a pioneer in immuno-neurology.

Importantly, we completed trial enrollment for our two lead programs. This includes the pivotal INFRONT-3 Phase 3 trial of our programming elevating candidate, latozinemab, in frontotemporal dementia with progranulin gene mutation or FTD-GRN and INVOKE-2 Phase 2 trial of our TREM2 candidate, AL002 in early Alzheimer’s disease. In partnership with GSK, we also recently dosed the first participant in PROGRESS-AD, the Phase 2 clinical trial of AL101 in early Alzheimer’s disease. Furthermore, in February 2024, the FDA granted Breakthrough Therapy designation to latozinemab for FTD-GRN marking another significant achievement. It is worth noting that although FTD is a complex disease clinically, we have developed a straightforward approach to correcting progranulin deficiency, the underlying cause of the disease.

Collectively, these advancements move us closer to potential meaningful data readout this year and next. In January, we also further strengthened our balance sheet with the completion of $75 million follow-on financing, which Marc will touch on further. Later in this call, Sara will provide insight in our early research and development efforts, including Alector’s brain carrier technology platform. Our commitment to addressing neurodegeneration remains unwavering. And with our advanced pipeline, strong cash position, we are well equipped for meaningful value creation in the next phase of our growth. This year, we will continue to focus on delivering and translating our progress into meaningful impact. An important event will be to anticipate the data readout from INVOKE-2 Phase 2 trial of AL002 in the first quarter.

This will potentially be a major step forward in elucidating our immuno-neurology hypothesis. Together with the support from our partners, we are committed to advancing neurodegenerative disease research, reflecting our firm belief in the immuno-neurology potential. With that, I will turn it over to Gary to talk about our goals and expectations for our clinical development program. Gary?

Gary Romano: Thank you, Arnon. I’ll begin with our AL002 program, the most advanced TREM2 program in clinical development for Alzheimer’s disease. AL002 is a novel investigational humanized monoclonal antibody that binds to and activates TREM2, a key microglial receptor that senses pathological changes in the brain. Binding of AL002 to the TREM2 receptor triggers microglial signaling pathways, which increase microglial proliferation, survival and function, enhancing the effectiveness of microglia to protect the brain against insults, including age-related neurodegenerative disease. We completed our Phase 1 trial of AL002 in healthy volunteers, which demonstrated both dose-dependent target engagement and activation of microglia.

In the trial, AL002 is also shown to be well tolerated. Our ongoing INVOKE-2 Phase 2b study of AL002 is a randomized double-blind placebo-controlled common closed design study of up to 96 weeks of treatment with AL002, in which 381 participants with early Alzheimer’s disease were randomized. The study includes three doses of AL002 that demonstrated robust target engagement and increased microbial signaling in Phase 1. INVOKE-2 completed enrollment ahead of schedule in September of last year. The primary clinical outcome measure for this study is the CDR Sum of Boxes. We are also collecting secondary clinical and functional outcome assessments, including the ADAS-Cog13 and ADCS-ADL-MCI from which we will derive treatment effects on the Integrated Alzheimer’s Rating Scale, or iADRS.

The trial will also deliver a robust biomarker package, reflecting target engagement as well as treatment effects on microglial activity and Alzheimer’s pathophysiology. Treatment effects on Alzheimer’s pathophysiology will be assessed with CSF and plasma biomarkers of abeta and tau as well as both amyloid and tau PET. And we’ll also have biomarkers of astrogliosis, neuroinflammation, synaptic health and neurodegeneration. We intend to use the proportional analysis approach with this study, which will enable us to use all of the data collected in this common closed design trial, meaning that it will include data from all participants out to 48 weeks and also include additional longer term follow-up from those participants who are in the study for up to 96 weeks.

We also have a long-term extension where we will remain blinded to treatment assignment and thus can provide additional information on long-term safety and also on treatment effects on clinical outcome measures and biomarkers. As we reported last year at AAIC a subset of participants in the ongoing INVOKE-2 trial have had treatment-emergent MRI findings that resemble the amyloid-related imaging abnormality for ARIA that has been observed with anti-amyloid therapies. These MRI findings are indistinguishable from ARIA with regard to the MRI features, incidents, timing of onset and resolution, relatedness to the number of APOE4 alleles as well as to the frequency and spectrum of associated clinical manifestations. In the current trial population that includes APOE4 heterozygous and APOE4 non-carriers, analysis of the still-blinded data shows an incidence of ARIA-E and ARIA-H of approximately 20%.

Of those with ARIA-E, approximately 90% have been asymptomatic and most symptomatic participants have had mild and self-limited presentations. Most relevant from a clinical perspective, the incidence of clinically serious ARIA that is those with ARIA related SAEs is just under 1% of all participants that have been dosed. An independent data monitoring committee reviews data from this trial regularly and continues to recommend that the trial proceed. Our goals for INVOKE-2 trial and for AL002 in the long-term are to slow the progression of Alzheimer’s disease by therapeutic restoration of microglial function. While one of the potential effects of TREM2 agonism maybe to increase the clearance of misfolded proteins, including amyloid, we expect AL002 to also amplify the broader beneficial effects of healthy microglia on the brain.

This includes maintaining synaptic connections, supporting astrocyte and oligodendrocyte function, preserving the blood brain barrier in vasculature and upholding immune tolerance. Thus, our expectation is that the restoration of microglial function by AL002 will reduce the brain’s vulnerability to neurodegenerative disease and that the INVOKE-2 trial will demonstrate treatment related slowing of Alzheimer’s disease progression as demonstrated by a combination of clinical, functional and biomarker readouts. Given the multiple mechanisms by which healthy microglia protect the brain against neurodegenerative disease, we hypothesized that by the end of development, AL002 may ultimately display stronger efficacy than current therapies that target individual misfolded proteins.

Through its novel and complementary mechanism of action, we expect AL002 to be effective either as a standalone therapy or in combination with anti-amyloid therapies. Given that agonism of TREM2 has the potential to reduce the brains vulnerability to neurodegenerative disease through these multiple downstream mechanisms, we believe that treatment of benefits of AL002 may manifest differently from what we have seen in the anti-amyloid antibody trials. For example, with regard to biomarker responses, lowering cerebral amyloid PET signal to the 20 to 30 centiloid threshold, which for anti-amyloid antibodies appears to be a necessary condition for clinical efficacy, may not be relevant to this mechanism of action that goes beyond amyloid clearance.

Additionally, optimal disease stages for intervention maybe broader. Unlike therapeutics targeting amyloid or tau, we do not expect the beneficial effects of healthy microglia to be limited to specific pathophysiological stages of disease and thus AL002 has potential to benefit patients from preclinical Alzheimer’s disease through advanced dementia. I’ll now turn to latozinemab, our novel first-in-class progranulin elevating candidate and the most advanced therapeutic and clinical development for the treatment of frontotemporal dementia. You may recall that latozinemab has previously received both orphan drug designation for FTD and fast-track designation for FTD granulin from FDA. We are pleased to share that in February, FDA granted latozinemab breakthrough therapy designation for FTD granulin based on our INFRONT-2 Phase 2 clinical trial data.

FDA’s breakthrough therapy designation is granted to expedite the development and review of drugs that are intended to treat a serious condition when preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint. With this designation, we look forward to continued productive conversations with the FDA, recognizing the unmet need for people living with FTD granulin, a serious condition for which there are no FDA-approved treatment options available. In October 2023, we achieved target enrollment of the pivotal randomized double-blind placebo-controlled INFRONT-3 Phase 3 clinical trial of latozinemab, randomizing 103 participants with symptomatic FTD granulin and 16 participants who are pre-symptomatic and at risk for FTD granulin.

Our goal was to enroll 90 to 100 symptomatic participants supported by feedback from FDA and EMA. We are actively progressing the INFRONT-3 trial in partnership with GSK and look forward to the pivotal Phase 3 data readout following the 96-week treatment period. I’d like to now turn to AL101, our second product candidate in our progranulin portfolio that we are developing in partnership with GSK. Like latozinemab, AL101 is a monoclonal antibody that blocks sortilin to elevate progranulin levels. It’s distinct pharmacokinetic and pharmacodynamic properties have potential to enable dosing regimens that maybe more suitable for use in the treatment of larger indications, such as Alzheimer’s disease. Our Phase 1 study in healthy volunteers demonstrated that AL101 was well tolerated and increased progranulin levels in plasma and CSF in a dose-dependent manner.

In August 2023, Alector and GSK received FDA clearance of its IND application for AL101 in the treatment of early Alzheimer’s disease. The rationale for treatment of Alzheimer’s disease is that genetic variance that results in modest reductions of progranulin levels are associated with an increased risk of developing Alzheimer’s disease. Conversely, in animal models of Alzheimer’s disease, elevation of progranulin has been shown to be protected. In February of this year, the first participant was dosed in the PROGRESS-AD study of AL101, which is being operationalized by our partner, GSK. PROGRESS-AD is a randomized double-blind placebo-controlled Phase 2 clinical trial of AL101, enrolling approximately 282 patients with early Alzheimer’s disease at multiple sites globally.

The 36-week study is designed to assess the safety and efficacy of two dose levels of AL101 compared to placebo. Participants are randomized to one of three dose groups receiving AL101 or placebo intravenously. The primary endpoint of the study is disease progression as measured by the CDR Sum of Boxes. The trial also employs other clinical and functional outcome assessments and biomarkers. We look forward to sharing additional information on PROGRESS-AD as the trial advances. With that overview, I will now turn the call over to Sara to provide an update on our early research pipeline. Sara?

Sara Kenkare-Mitra: Thank you, Gary. We are making meaningful strides in progressing our research portfolio to fuel our development pipeline and set the stage for our long-term growth. Our drug discovery engine is fine-tuned through a decade of deep biological exploration and expertise in neuroscience as well as strong expertise and experience in antibody, protein engineering and preclinical development. We have also developed a modular and scalable target discovery platform, which seamlessly integrates generics, multi-omics and in-house generated wet lab data to uncover novel targets. The system further improves predictions through machine learning-based target identification, multidimensional functional validation and data integration with AI-based analysis.

Our overall integrated approach allows us to move swiftly from target identification to the development of late-stage first-in-class immuno-neurology drug candidates. In addition to our target and drug discovery engine, we have also made progress on our proprietary blood-brain barrier technology. While our late-stage clinical candidates show brain penetration and target engagement, we are developing a proprietary versatile blood-brain barrier technology called Alector Brain Carrier, or ABC, to strive to lower efficacious doses with favorable safety and efficacy and enable delivery of additional novel drugs into the CNS. We intend to selectively deploy our technology in a fit-for-purpose manner on our next-generation programs that are currently in our early portfolio.

ABC Technology is a toolbox approach incorporating a suite of single chain variable fragments, antigen binding fragments or variable heavy chain domains that bind to target at the blood-brain barrier, such as transferrin and CD98 heavy chain with varying affinity. We have been able to achieve greater than tenfold increase in vein concentrations of multiple cargoes and demonstrated deep brain penetration to cell types of interest like neurons and microglia. The modular nature of this technology allows the affinity, valency and format of the final therapeutic to be harmonized with the mechanism of action and cell type specificity of the associated cargo. We are also leveraging our ABC technology to advance the development of protein replacement therapies for neurodegenerative diseases, which aligns with our focus on genetic risk factors.

Our technology’s adaptability is demonstrated through versatile bispecific formats, complemented by customizable Fc adaptations for optimized effective function, half-life and single chain configuration. Based on the translatability of preclinical safety and efficacy studies, our technology appears to exhibit a favorable safety profile even when actively engaging with Fc. We look forward to sharing more details about our innovative research portfolio, including our Alector Brain Carrier Technology during a virtual event later this year. I’ll now turn it over to Marc to provide an update on our financial results. Marc?

Marc Grasso: Thank you, Sara. As summarized in our fourth quarter and full year 2023 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 31, 2023, our cash, cash equivalents and short-term investments totaled $548.9 million, strengthening our financial position, we completed a follow-on financing in January of this year, raising $75 million in gross proceeds. Inclusive of this raise, our cash runway is now through 2026, approximately a full year beyond the expected FTD-GRN Pivotal Phase 3, INFRONT-3 data readout and approximately 2 years beyond our TREM2 Phase 2 INVOKE-2 data readout.

Further, we are now also in a position to selectively accelerate investment in our innovative proprietary portfolio, including programs enhanced by our proprietary Alector Brain Carrier Technology platform. We appreciate the support of significant new investors as well as participation from our existing shareholders. Now turning to our operating results. Collaboration revenue for the fourth quarter was $15.2 million compared to $14.4 million for the same period in 2022. Collaboration revenue for the year was $97.1 million compared to $133.6 million in 2022. Total research and development expenses for the fourth quarter were $47.7 million compared to $54.5 million for the same period in 2022. Total research and development expenses for the year were $192.1 million compared to $210.4 million in 2022.

Total general and administrative expenses for the quarter were $14.9 million compared to $15.4 million for the same period in 2022. Total general and administrative expenses for the year were $56.7 million compared to $61 million in 2022. For 2024, we estimate our collaboration revenue to be between $60 million and $70 million. Our anticipated total research and development expenses are estimated to be between $210 million and $230 million and total anticipated general and administrative expenses are estimated to be between $60 million and $70 million. In December, Alector hosted two virtual research and development events discussing our TREM2 and progranulin programs in detail. The events included presentations from leading scientific and clinical experts.

We encourage those who didn’t have an opportunity to participate in the live events to watch the replays located under the Investor Events and Presentations section of our website. We remain focused on advancing our novel portfolio and Alector Brain Carrier Technology to treat neurodegenerative diseases. We look forward to providing additional updates as we advance our work. That concludes our prepared comments for today’s call. Operator, you may now open the line for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question today is coming from Yaron Werber of TD Cowen. Your line is open.

Unidentified Analyst: Hi, this is Brendan on for Yaron. Thanks very much for taking the question. Just a couple of quick ones from us. Actually, first, on the brain carrier program. Just wondering if you might be able to give us a little bit more color on kind of just the broad approach to the platform. I mean you mentioned Transferrin and CD98. Are you kind of at this point, planning to kind of choose one and use that across the board for all the BC programs? Or are you kind of going to go on an indication-by-indication basis? And then, I guess, really on the ADP027 asset that you called out in the press release, kind of just wondering what drove the decision to target GPNMB and maybe how applicable that target would be kind of to the broader Parkinson’s population? Thanks very much.

Sara Kenkare-Mitra: Thanks. I’ll just address the question about the blood-brain barrier technology, and then I’ll pass it to Arnon to answer your question on GPNMB. Briefly, our blood-brain barrier approach, as we said, employs a very versatile brain carrier technology, and we are targeting blood-brain barrier proteins, both TFR and CD98 heavy chain. At this moment, we are going after both these targets and applying them across both our second-generation efforts for our current late-stage programs as well as our new novel sort of target molecules in research and certainly do not have any intent initially to choose one over the other. We will – depending on the best approach for each target and each molecule. Again, we are using very adaptable technology, which allows us to customize for therapeutic affinity, valency, etcetera.

We’ve got bispecific formats and customizable Fc adaptations that allow us to tweak effective function as well as optimize half-life on the molecule. So, our approach currently is to try both these approaches, targeting approaches, trafficking approaches, both for our late-stage programs as well as for our novel targets. And maybe Arnon can share his thoughts on our ADP027 program.

Arnon Rosenthal: Yes. So yes, we do think that GPNMB targeting will be applicable for sporadic Parkinson’s disease. GPNMB is lysosomal regulator or it’s a risk gene for Parkinson’s disease. There are both risk and protective variance, and we developed a drug that manly can exceed the protective variance. And we think that sort of lysosomal pathology is a general feature in Parkinson’s disease and GPNMB is interacting with LRRK2, is interacting with GCAS [ph] to other risk genes for Parkinson’s disease. It’s up regulated in multiple types of sporadic PD. So, we do think that it will be applicable for any type of Parkinson’s disease.

Unidentified Analyst: Great. Thanks very much.

Operator: Thank you. [Operator Instructions] Our next question today will be coming from Paul Matteis of Stifel.

Unidentified Analyst: Hi, this is Julian on for Paul. Thanks so much for taking our question. I guess on AL002, the TREM2 program, with the readout expected towards the end of the year, the trial is anticipated to run for about a year, at least at a minimum in terms of follow-up. I guess what gives you guys confidence that this will be long enough to separate from placebo? And do you anticipate at all that there will be a significant group of patients out to two years? And any other color on how the overall data will be analyzed or shared in the top line would be super helpful. Thank you.

Gary Romano: Yes. Hi, thanks for the question. This is Gary. So, the study, as you heard, is a common close design in which all patients will stay in the trial were up to 96 weeks and then roll over into a long-term extension. And that is until the last patient out reaches 48 weeks, at which time all patients will roll over into the long-term extension. And so, we will have data – not only what we have data out to 48 weeks on everybody, but we’ll also have data out to – we’ll have, for example, clinical outcome assessments out to 96 weeks on a good subset of patients. We’re planning to use an analysis method called – it’s a proportional analysis method or proportional MMRM, for example, which uses all of the data.

So, it’s not just a time to event at one time point, but it includes data from all time points. It’s a way of getting the most out of your data by using all of the data and that’s our plan for the analysis, for the primary analysis. You asked a question about do we think this is enough time to see treatment effect? We’re looking at treatment effect in this study as AbbVie and Alector designed the study in order to be a biomarker-rich study that will look at the totality of the data. So, looking to see that we can slow Alzheimer’s disease through a combination of clinical functional and biomarker readouts and we’re going to have a very robust biomarker package that includes not only what we originally intended, which would be Amyloid and tau PET sub-studies, but also now with the acceleration and validation of phospho-tau assays.

We’ll be looking at P-217 and tau aggregates in plasma on all patients. So, we feel confident that we are going to, through this totality of this data, be able to determine whether we’re slowing the progression of Alzheimer’s disease, which is what the original design was intended to do.

Unidentified Analyst: Excellent. Thanks for the color.

Operator: Thank you. [Operator Instructions] And our next question will be coming from Jeffrey Hung of Morgan Stanley. Your line is open.

Michael Reid: Hi, this is Michael Reid on for Jeff Hung. Thank you for taking our question. For INVOKE, how do you expect levels of soluble TREM2 to look at for patients at baseline with preclinical AD versus maybe a little bit more progressive dementia? Like does the higher baseline soluble TREM2 level like imply higher chances for like a pharmacodynamic effect?

Gary Romano: So first, let me just – this is Gary again. Just to clarify, we are enrolling patients, as you said, with early Alzheimer’s disease. We are not enrolling for example, just those with genetic variants like the R47H variant. We don’t believe that the baseline levels of soluble TREM2 necessarily – we don’t really know whether that’s going to predict a pharmacological effect. But what we would expect in our study is that the binding of the AL002 to TREM2 causes internalization of the receptor. And this actually causes a reduction in soluble TREM2 because what we’re basically doing is reducing by binding and internalizing receptor, we’re lowering the levels of microglial membrane TREM2 which – and that reduces the amount of the cleavage product, soluble TREM2, which has constituently cleaved in – from TREM2, right?

So, we plan – we will see – as we saw – we intend to see as we did in Phase 1, a reduction in soluble TREM2. Again, there’s different ideas about soluble TREM2 and what it’s low is. We believe that primarily, it’s really a marker of membrane TREM2. And there have been – there’s a fair amount of data out there that suggests that soluble TREM2 levels, which again, are reflecting the amount of TREM2 in the membrane, correlate as they are higher, they correlate with better outcomes or progression of disease of Alzheimer’s disease or slower conversion from CI to Alzheimer’s disease, slower progression of brain volume loss. So again, but that is a function basically of having greater TREM2 activity and our antibody is – increases TREM2 signaling.

Michael Reid: Thank you so much. Really helpful.

Operator: Thank you. [Operator Instructions] And our next question will be coming from Pete Stavropoulos of Cantor Fitzgerald. Your line is open.

Pete Stavropoulos: Hi, Arnon and team. Thank you for taking my questions. So first one, I believe that for the INVOKE-2 study, the placebo rolls over, you will start – you will be starting them at a lower dose than those in the original randomized to active arm and then titrating them upwards. Can you just discuss the time line for the titration? And will you be able to capture any data points, especially biomarker-wise, that could suggest that the starting dose is therapeutically active? And if so, what would be the key biomarker, or biomarkers, or you believe may be informative at that time point?

Gary Romano: Yes. Thanks, Pete. A good question. So, you’re right. We are – so just to clarify, in the long-term extension, all patients that were on active doses in the double blind will roll over to the same dose and continue in the on-term extension. Those that were originally randomized to placebo will be titrated – started on active, beginning with a – with – at a lower dose, that’s right, 6 milligrams per kilogram and increased – and they will be dose escalated every 2 months. And one reason for doing this is to learn more about the potential mitigations for the area like signal that we’re seeing. As you know, with some of the anti-amyloid therapeutics there’s been data that suggests that starting at a lower dose and/or titrating more slowly than we did in this double-blind study could be mitigated.

So that’s one advantage. We do believe that this slow titration though is actually going to help us in another way, not only to learn about mitigation for ARIA, but also help us to – in a sense, it will – this long-term extension which, by the way, we invested with AbbVie to keep this blinded to the original treatment assignment. This will give us an opportunity to continue to follow patients beyond the double blind into the long-term extension to look for not only for safety but also to look for treatment effects on biomarkers and most importantly, on clinical outcome measures. So, for example, with the common closed design, some of the patients will have a year of data, follow-up data on clinical outcomes. But in the long-term extension, which would really essentially be a randomized start design, we’ll be able to look for differences between the original placebo group and the active dose groups in the long-term extension.

We’ll be able to look at those clinical outcome assessments and differences between the placebo and actives in that long-term extension.

Pete Stavropoulos: Right, thank you for that. And one question on the Phase 2 for AL101, it was originally initiated with GSK. Just looking at the study design, I see that there were two undisclosed doses being evaluated. How did you select those doses? If you can tell us – I know was it based on a certain level of PGRN increase in the Phase 1? Are you trying to keep it above a certain threshold or below a certain level?

Gary Romano: Sara, I’ll start. Maybe, Sara, if you want to chime in on the PK here behind you. Yes, these – so we have two doses. We have a maximal dose that gives us maximal elevations of progranulin. And we also chose a lower dose. And those to be – I’m not sure how much of this we’ve disclosed in terms of the actual doses and the randomization ratio. So, I’m going to have to defer to Marc or Sara as to whether we’re talking about it at this time.

Sara Kenkare-Mitra: Thanks, Gary. I agree, Pete. We haven’t disclosed their actual doses or the selection, but mostly the doses were selected based on the PK and PD data that were generated in our Phase 1 single and multiple ascending dose studies and based on progranulin levels, of course. So, it was the elevation of progranulin in plasma and CSF that was modeled and based on this, the two doses were selected. We haven’t really shared the exact doses or the exact criteria for the selection of the doses.

Pete Stavropoulos: Okay, thank you for taking my questions.

Operator: Thank you. [Operator Instructions] The next question will be coming from Greg Harrison of Bank of America. Your line is open.

Greg Harrison: Hey, good afternoon. Thanks for taking the question. What endpoints that you’ll report from the INVOKE-2 trial, do you think will be key to understanding the benefit of AL002’s various mechanisms beyond amyloid reduction and potentially showing differentiation versus anti-amyloid antibodies.

Gary Romano: Yes. Thank you for that question, Greg. So just to remind everyone, the mechanism here is that we believe there’s therapeutic restoration of microglial function that will slow disease progression. And as you mentioned, that includes – may include enhanced clearance and misfolded proteins like amyloid, which we know is one of the important functions of microglia, but that there are also a number of other beneficial effects of microglia that they do in normal maintenance to preserve brain health, reduce vulnerability of the brain to insults, including age related neurodegenerative diseases. And I think we mentioned those a couple of times in the presentation. So, the – in this study, therefore, we are – and again, this is a novel mechanism, and we think that it’s important to realize that the – that through these various downstream mechanisms of healthy – that are in play because of healthy microglia, that there are a number of things we can measure, and we are going to be measuring in the study, including outside the typical Alzheimer’s biomarkers that we mentioned, abeta and tau, both in plasma and with PET scans.

We will also be measuring astrocytes, effects on astrocytes and synapses and oligodendrocytes function, etcetera. I think the totality – really what the decision is going to be based on though, is whether or not we are slowing the progression of Alzheimer’s disease. And so, all of those mechanisms to be meaningful, have to add up to a slowing in the progression of disease. And that will probably be best measured by clinical outcome measures and also by biomarkers. And of those biomarkers, not only abeta, but very importantly, the tau biomarkers because we know that tau – changes in tau and tau aggregates travel or correlate most closely with disease progression in AD. And so, we will be looking at the clinical outcome measures, we will be looking at the Alzheimer’s biomarkers, particularly, for example, plasma p217 and also looking at aggregates with other tau-phospho assays like the microtubule binding region assay.

I want to emphasize, the study is powered for a clinical effect of about 40%. That’s a big effect. So, we may, or we may not see a clinically significant effect of that size in this relatively small Phase 2 study. But again, the original design was intended not to be – have a decision made on the primary clinical endpoint, but on the totality of the data, particularly the biomarker data that I mentioned.

Greg Harrison: Got it. That’s really helpful. Thanks.

Operator: Thank you. [Operator Instructions] And our next question will be coming from Corinne Jenkins of Goldman Sachs. Your line is open.

Unidentified Analyst: Hi. This is Omari [ph] on for Corinne. Just one for us, could you please share what’s embedded in the cash runway guidance with respect to clinical activities more so beyond the near-term clinical events?

Marc Grasso: Yes. Thanks for the questions. I think the question was around what’s included in the cash runway guidance. So, the cash runway guidance as noted is now through 2026, and that’s 2 years post the anticipated TREM2 data and also approximately a full year beyond the anticipated FTD-GRN Phase 3 data and also allows us to accelerate our investment in our blood-brain barrier technology platform and also prior to our earlier-stage pipeline. Importantly, it is conservative in the sense that we are not including any milestones from partners, including the potential significant opt-in from AbbVie at the end of the completion of the Phase 2. And it does include a full spend on 002 through the Phase 2 completion, also continued spend on that program for the extension study and spend on the FTD-GRN Phase 3 and also spend on the recently commenced AL101 Phase 2 for Alzheimer’s disease.

Those are the major components in addition to continuing to progress our blood-brain barrier platform and earlier pipeline.

Unidentified Analyst: Understood. Thank you.

Marc Grasso: Thanks for the question.

Operator: Thank you. [Operator Instructions] And our next question is coming from Carter Gould of Barclays. Your line is open.

Unidentified Analyst: Hi. This is Leon on for Carter. Thanks for taking my question. So, we have two on INVOKE-2. So, at this point, do you have alignment or understanding with AbbVie on what a potentially good profile could look like on the readout? And in terms of your update on achieving 90% enrollment in the OLE from INVOKE-2, now that’s against the backdrop of having the ARIA-like effects you have seen. So, we want to get your thoughts here on the implication of getting 90% enrollment in the OLE? Is there some nuance that we are missing, or anything that you would like to highlight in terms of what this could tell you about the safety and tolerability profile? Thank you.

Gary Romano: Yes. Well, to the latter question, just that’s 90% of those that were eligible to roll over out of the 96-week common close design study. And I mean I think that – we believe that reflects an interest in patients to continue. There are increasingly other options like they could start taking latozinemab. But most – if you hear 90% or so are rolling over and staying in the long-term extension, which we interpret positively in terms of tolerability and potentially other effects of the drug. But we can’t – we really can’t speculate on it at this point. I am blanking on your first question, sorry. Can just remind me at the beginning, I am sure I will remember it. You were asking – oh, I remember now, about the readout, right.

Sorry, I just had a blank out there. So, yes, so as I mentioned, we have been aligned with AbbVie really from the start on how we designed this study that we are really looking at the totality of the data to tell us whether we are slowing the progression of Alzheimer’s disease, which – to make a decision on what happens next with this compound and whether it progresses. So, that includes, as I have said, clinical outcome measures, and it includes some functional measures, and it includes a lot of biomarkers. And particularly, we are thinking that we will be really focusing on those Alzheimer’s, biomarkers of Alzheimer’s pathophysiology to tell us that we are seeing some slowing of the disease progression. I hope that answers your question?

Unidentified Analyst: Thank you.

Operator: [Operator Instructions] And our next question will be coming from Myles Minter of William Blair, please.

Myles Minter: Hi. Just a couple on INVOKE-2, are there any sort of material differences that you are seeing in the ARIA incidence rates between the double-blind portion of INVOKE-2 and the long-term open-label extension? I would assume that ARIA goes up if you are having placebo switched to active drug in that arm. That’s the first question. The second one is you are measuring tau in all of those patients. Are you going to do a primary analysis by which you stratify that tau burden, similar to what Eli Lilly did and others have done in a post-hoc setting? Thanks.

Gary Romano: Yes. Thank you. To the second question, we will have the capability of doing that post – we didn’t stratify the study based on tau, but we will be able to look with plasma p-tau measures in order to see whether there are differential effects based on baseline tau – not the baseline tauopathy. And I should do this in the other direction. And your first question was around the ARIA signal, yes. So, we have shown – we have shared this data, the imaging, the MRI, the MRI themselves, the clinical vignettes, these patients. And truly, this looks indistinguishable from the area that has been described with anti-amyloid antibodies with – in every regard with regards to its timing of onset. For example, we see this early in treatment and then it really tapers off the time to onset and resolution.