Neurology-Focused Alector Downgraded On Failed Alzheimer's Study, BofA Securities Highlights Lack Of Catalysts

Core Viewpoint - Bank of America Securities has downgraded Alector, Inc. due to the failure of its AL002 program in the INVOKE-2 Phase 2 trial for early Alzheimer's disease, which did not meet its primary endpoint [1][2] Group 1: AL002 Program and Impact - The AL002 program is likely considered finished following its failure to slow Alzheimer's clinical progression as measured by the Clinical Dementia Rating Sum of Boxes (CDR-SB) [1] - Alector's workforce has been reduced by 17%, and the anticipated $250 million opt-in milestone from AbbVie is not expected to be realized [2] - The failure of AL002 is expected to negatively affect investor sentiment as they await Phase 3 data on latozinemab for frontotemporal dementia [2] Group 2: Future Trials and Expectations - The INFRONT-3 Phase 3 trial has completed enrollment in October 2023, with a treatment duration of 96 weeks [3] - Alector's next significant milestone is anticipated to be the results from the Phase 3 INFRONT-3 trial, expected in late 2025 or early 2026 [4] Group 3: Analyst Outlook and Valuation - The analyst downgraded Alector from Neutral to Underperform and reduced the price target from$9 to $1, reflecting the removal of AL002 and lower valuation for AL001 [4] - Alector is viewed as being in a "wait-and-see" phase over the next year, with limited opportunities for significant progress in the near term [6] Group 4: Other Programs and Risks - While there is optimism about AL001 targeting progranulin, it carries a similar level of biological risk as AL002 [5] - AL101 presents another potential avenue for Alzheimer's disease, but its prospects are viewed cautiously until it demonstrates functional benefits [5] Group 5: Market Reaction - Alector's stock has decreased by 10.7$2.25 [7]