The shares of the clinical-stage biotech, Alector (ALEC -21.1%) have reached a 15-month low after Stifel downgraded it to Hold from Buy with cautious remarks on the company’s dementia candidate AL001. The price target lowered to $18 from $32 per share implies a premium of ~21% to the last close.
Alector (NASDAQ:ALEC) has partnered with GlaxoSmithKline (NYSE:GSK) to develop AL001, a monoclonal antibody, to address genetically driven progranulin deficiencies, which are thought to be a cause for frontotemporal dementia (FTD) and a risk factor for conditions such as Alzheimer’s.
Currently, AL001 is undergoing a Phase 3 pivotal trial for at-risk and symptomatic patients with FTD carrying a progranulin mutation (FTD-GRN).
Commenting on the trial, Stifel analyst Paul Matteis and the team note that its recruitment is progressing slower than anticipated. The team also doubts the success rate for AL001 as they expect a lower-than-expected presence of GRN mutations in FTD given the company’s experience in the enrollment. That has led the team to reduce the revenue estimates for the therapy.
Sounding caution on its mechanism of action, they argued that AL001 raises progranulin via the blockade of the SORT1 receptor, whose role is subject to debate.
The analysts argue that 12-month for the treatment was uncertain and also express doubt on when or if they can expect longer-term data.
Referring to the company’s Alzheimer’s candidate AL002 designed to bind with TREM2 receptor, the team wrote: “….We are unsure if we'll get TREM2 proof-of-concept data until late 2023 at the earliest.”
Read more on 12-month data for AL001 from a Phase 2 trial involving FTD-GRN patients.