Alector IPO Banks $176M to Test Alzheimer’s Drugs in Clinical Trials

Xconomy San Francisco — 

Alector, a company taking an immunotherapy approach to Alzheimer’s disease and other brain disorders, has raised approximately $176 million in an initial public offering.

The South San Francisco, CA, biotech sold 9.25 million shares Wednesday evening priced at $19 apiece, which was the midpoint of its targeted $18 to $20 per share range. Those shares are expected to begin trading on the Nasdaq Thursday under the stock symbol “ALEC.”

Unlike the long line of failed Alzheimer’s disease drugs developed to clear beta-amyloid protein buildup on the brain, Alector approaches the condition as an immune system problem. It says that underlying Alzheimer’s and other neurodegenerative disorders is the work of a brain immune cell called microglia. These cells nourish neurons and clean up cellular debris and harmful proteins, Alector says. The company’s antibody drugs target the mutations in the genes that govern the brain’s immune system, including microglia. The goal is to slow, or even reverse, the deterioration of these immune cells in the brain, according to the prospectus filed with the SEC.

Alector plans to use the IPO cash for more tests of its experimental brain therapies. So far, two compounds have started tests in humans. AL001, an experimental treatment for frontotemporal dementia, is in a Phase 1 dose-ascending study. According to Alector’s filings, the drug has been given to 44 healthy patients as of Jan. 25. The company plans to proceed to a Phase 1b proof-of-mechanism study in the first half of this year, and then a Phase 2 study in the first half of next year.

A second Alector drug, the experimental Alzheimer’s compound AL002, started a Phase 1 study last year. The company plans to start a Phase 1 test of another Alzheimer’s compound, AL003, later this year. Early-stage studies for a fourth Alector drug, AL101, are planned for “multiple neurodegenerative disorders” this year, the company says. In its prospectus, Alector says the genetic mutation AL101 targets is linked to Alzheimer’s and Parkinson’s.

Alector is developing AL002 and AL003 in an alliance with AbbVie (NYSE: ABBV). Last year, the pharmaceutical giant paid Alector $205 million cash up front and made a $20 million equity investment as part of the biotech’s most recent round of financing. Alector is responsible for developing those compounds through Phase 2 testing. If AbbVie exercises its options on the drugs, it would take over clinical development and commercialization, if they are approved. Alector stands to gain up to $985 million more under the partnership, depending on the progress of the compounds.

Through the third quarter of 2018, Alector spent $48.9 million on research and development, a 156 percent increase compared to the prior year, due to clinical trials work. Alector has raised more than $210 million in financing, most recently a $133 million Series E round of funding last year. Before the IPO, the company’s largest shareholder was Polaris Venture Partners, which held a 21.7 percent stake, according to the prospectus.

Alector’s market debut comes as IPO activity resumes following the partial government shutdown, which affected both the FDA and the SEC. Others life science companies that have set terms for their IPOs include Gossamer Bio, Harpoon Therapeutics, TCR² Therapeutics, and Stealth BioTherapeutics.

Image by Flickr user _DJ _ via a Creative Commons license