Alector, Inc. Q2 FY2024 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Alector Second Quarter and Midyear 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to Katie Hogan, Senior Director of Corporate Communications and Investor Relations. Please go ahead.

Thank you, operator, and hello, everyone. Earlier this afternoon, we released our financial results for the second quarter of 2024. The press release is available on our website at www.alector.com, and our 10-Q 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'll 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?

Thank you, Katie. Good afternoon, everyone. We appreciate you joining our conference call today. I'll start by highlighting Alector's key initiatives during the first half of 2024. Then I'll invite Gary to discuss our later stage clinical programs. Next, Sara will share the progress we believe we have achieved with Alector Brain Carrier, our proprietary versatile blood-brain barrier technology platform. Afterwards, Marc will provide an update on our financial results and milestone outlook. During the first half of 2024, we remain committed to advancing our maturing pipeline and are setting the stage for a transformative period ahead. Specifically, we continue to prepare for the data readout from the AL002 Phase 2 trial INVOKE-2 expected in Q4. AL002, our novel TREM2 agonist, aims to enhance TREM2 signaling and activate the healthy and beneficial role that microglia play in the setting of neurodegenerative diseases. This immuno-neurology approach leverages multiple mechanisms of healthy microglia to protect the brain against Alzheimer's disease, potentially offering an efficacy advantage compared to current therapies that target individual misfolded proteins. AL002 is the most advanced TREM2 activating candidate in clinical development worldwide, with potential as a monotherapy or as an add-on therapy with anti-amyloids. Today, we will discuss the patient baseline characteristics reported for the INVOKE-2 trial at the Alzheimer's Association International Conference in July. These characteristics confirm a representative study population that enables testing of the effect of AL002 in early Alzheimer's disease. We will also delve into the multiple clinical trial imaging and biomarkers readouts for the INVOKE-2 trial, our common close design and statistical primary MMRM analysis, and our long-term extension study, all of which were designed to strengthen the trial analysis. Additionally, Gary will share our thoughts on what the successful data readout looks like. In February 2024, the FDA granted breakthrough therapy designation to latozinemab for the potential treatment of FTD with GRN limitations. You may recall that latozinemab is a monoclonal antibody that elevates the level of the immune regulatory protein progranulin by blocking sortilin. The breakthrough designation has provided the opportunity for increased interactions with the FDA on this program. And now we have additional clarity on how key biomarkers may support our path to a potential regulatory submission. We will provide more details on this FDA feedback during today's call. Looking ahead, we believe that we are on track for the pivotal Phase 3 data readouts from the INFRONT-3 trial in late 2025, early 2026, and we plan to share more specifics soon. Enrollment continues in the PROGRESS-AD global Phase 2 clinical trial of AL101 for early Alzheimer's disease with dosing initiated early this year. Like latozinemab, AL101 elevates progranulin levels, but offers a distinct pharmacokinetics and pharmacodynamic profile suitable for broader indications. Furthermore, in June, we introduced Alector Brain Carrier, ABC, our proprietary blood-brain barrier technology platform. ABC enhances the delivery of therapeutic agents with greater penetration and efficacy at lower doses, with the goal of reducing costs and improving patient outcomes. The introduction of ABC represents a significant advancement in our capabilities to address these challenges of drug delivery in all degenerative diseases. To summarize, we continue advancing genetically validated first-in-class and best-in-class drug candidates for Alzheimer's disease, frontotemporal dementia, and other indications. By targeting genetic pathways implicated in all degenerative diseases and combining innovative science with emerging technology, we continue to strive for a world where degenerative brain disorders are a relic of the past. At this time, I'll turn the call over to Gary.

Thank you, Arnon. I'm pleased to provide further insights into our later-stage clinical portfolio, focusing on our advancements with AL002 and our progranulin programs. I'll begin with AL002. As a reminder, our ongoing INVOKE-2 Phase 2 trial, which was fully enrolled in September 2023, is a randomized, double-blind, placebo-controlled, common close study, evaluating up to 96 weeks of treatment with AL002 in 381 participants with early Alzheimer's disease. This trial includes three doses of AL002, which demonstrated robust target engagement and increased microglial signaling in our Phase 1 study. At the Alzheimer's Association International Conference last week, Alector presented participant baseline characteristics for INVOKE-2. As Arnon mentioned, the baseline clinical assessments confirm enrollment of the intended population of participants with early Alzheimer's disease. The clinical diagnosis and enrollment were mild cognitive impairment due to Alzheimer's disease for 67% of participants and mild dementia due to Alzheimer's disease for 33% of participants. Notably, participants with baseline amyloid assessments demonstrated a mean centiloid level of 100.1, aligning with expectations for early Alzheimer's disease cohorts. This data marks an important milestone in our global Phase 2 trial, which aims to evaluate the safety and efficacy of AL002 while testing the hypothesis that this first-in-class TREM2 agonist may slow the progression of Alzheimer's disease. We are on track for the INVOKE-2 data readout in the fourth quarter of 2024. Today, I'd like to describe the trial's outcome measures, our statistical analysis approach, our long-term extension study, and the expected trial outcomes. The primary clinical outcome is the CDR Sum of Boxes. We are also collecting secondary clinical and functional outcome assessments, including the ADAS-Cog 13 and ADCS-ADL-MCI from which we will derive treatment effects on the integrated Alzheimer's Rating Scale, or iADRS. This trial will also deliver a robust biomarker package, assessing target engagement, treatment effects on microglia, and treatment effects on Alzheimer's pathophysiology. Target engagement will be assessed by measuring treatment effects on CSF levels of soluble TREM2. You will recall that in our Phase 1 healthy volunteer study following single doses, we saw dose-dependent reductions in CSF soluble TREM2, including changes from baseline exceeding 50% at our highest doses. Treatment effects on microglial signaling will be assessed by measuring levels of CSF1R, SPP1, and IL-1 RN, which reflects proliferation, survival, and phagocytotic activity of microglia. As previously reported, we saw treatment effects on each of these pathways after single doses in our Phase 1 study. We are also exploring omics assessments of treatment-related changes in microglial subtypes. Treatment effects on Alzheimer's pathophysiology will be assessed with CSF and plasma biomarkers, with A-beta and tau as well as both amyloid-PET and tau-PET. We will also have biomarkers of astrogliosis, neuroinflammation, synaptic health, and neurodegeneration. The Phase 2 INVOKE-2 trial utilizes a common closed design in which participants remain in a double-blind study until the last participant completes 48 weeks of treatment. Earlier enrolled participants continue in the double-blind study for a maximum of 96 weeks of treatment before they are invited to join our long-term extension study. We intend to use a proportional analysis approach or specifically proportional MMRM, which enables us to use all the data collected in this common closed design trial. This means we will include data from all participants out to 48 weeks and also include additional data provided by the participants who will have had follow-up for up to 96 weeks. Efficacy will be calculated as the average treatment effect observed across multiple post-baseline visits. This approach increases power, potentially enabling us to reach statistical significance at a smaller effect size. If our drug slows disease progression comparable to the treatment effects of the anti-amyloid antibodies, we may have observed a significant treatment effect. Our ongoing INVOKE-2 long-term extension study is currently underway for participants who completed the initial treatment period. This LTE study remains blinded to treatment assignment, allowing for ongoing collection of meaningful clinical, biomarker, and safety data. Thus far, approximately 95% of eligible participants from INVOKE-2 have enrolled in the LTE study. In this LTE study, we are also assessing the effects of a modified dose titration on the severity of treatment-emergent MRI findings, resembling amyloid-related imaging abnormalities or ARIA. Participants who roll over from the placebo in the double-blind trial to active treatment in the LTE will begin titration at a lower dose than was used in the double-blind trial and will also have a slower dose titration schedule. This is intended to explore the effects of starting at a lower dose and using slower titration on the observed treatment-related MRI findings that resemble ARIA. For context, in the INVOKE-2 double-blind trial, dosing started at 15 mg/kg, and dose escalation occurred every four weeks during the first three months of the trial. Our hypothesis for the INVOKE-2 trial is that treatment with AL002 will increase TREM2 signaling, leading to therapeutic restoration of microglial functions that protect against neurodegenerative disease. This includes the clearance of misfolded proteins, such as amyloid, but we also expect AL002 to amplify the broader beneficial effects of healthy microglia on the brain, such as maintenance of synaptic connections, support of astrocyte and oligodendrocyte function, repair and maintenance of the blood-brain barrier and the vasculature, and regulation of immune tolerance. Thus, our expectation is that 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. With its broad and complementary mechanism of action, we expect AL002 to be effective as a standalone therapy and may also demonstrate additive or synergistic effects when used in combination with amyloid-targeted therapeutics. We also believe that treatment benefits of AL002 may manifest differently from what we have seen in trials of the anti-amyloid antibodies. For example, with regard to biomarker responses, lowering the cerebral amyloid-PET signal to the 24 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 may be 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. Therefore, AL002 may have potential to benefit patients ranging from preclinical Alzheimer’s disease through advanced dementia. Turning now to our progranulin programs. In a recent Type B interaction with the FDA, we and GSK received feedback on the potential future biologics license application for latozinemab. The FDA has indicated that it would consider the effects of latozinemab on plasma and cerebrospinal fluid progranulin levels as confirmatory evidence, supplementing the potential clinical effects of latozinemab, pending BLA review. We also aligned with the agency on disease-relevant fluid and imaging biomarkers that may be considered as supportive evidence of clinical efficacy, also subject to BLA review. These include biomarkers of astrocyte function, neurodegeneration, and brain atrophy. Based on the FDA feedback, we remain confident that the totality of evidence, including the primary clinical endpoint and biomarkers, could provide a path to potential approval for latozinemab. Following these productive interactions with the FDA, we believe we are on track for the pivotal INFRONT-3 Phase 3 data readout in late 2025 or early 2026. In parallel, enrollment continues in the PROGRESS-AD global Phase 2 clinical trial of AL101 for early Alzheimer’s disease. We and GSK are co-developing AL101 for the potential treatment of more prevalent neurodegenerative diseases, including Alzheimer’s disease and Parkinson’s disease. At the Alzheimer's Association International Conference, our partner GSK presented a poster highlighting data supporting the hypothesis that therapeutic increases of progranulin levels may be an effective treatment for Alzheimer’s disease. These findings demonstrate consistent causal associations between increased progranulin levels and reduced Alzheimer’s disease risk across the progranulin gene allelic spectrum, providing compelling genetic evidence for increasing progranulin levels as a potential therapeutic strategy to treat Alzheimer’s disease. As we advance these programs, we remain dedicated to harnessing our scientific and clinical expertise to drive forward transformative therapies for neurodegenerative diseases. At this time, I’ll turn it over to Sara for updates on our progress with the Alector Brain Carrier.

Thank you, Gary. In June, we held a virtual R&D event highlighting our Alector Brain Carrier, blood-brain barrier technology platform. At Alector, we have dedicated several years to developing our proprietary versatile Alector Brain Carrier technology known as ABC. We are leveraging the ABC platform as a vital tool in our preclinical pipeline and novel drug development. ABC enables us to expand our pipeline to include neurodegenerative diseases requiring enzyme or protein replacement. It enhances our novel antibody pipeline by improving brain distribution, potentially requiring lower doses and enabling subcutaneous delivery. Additionally, we are also leveraging our ABC technology in the development of second-generation drugs towards our pipeline and validated targets. ABC has been validated with multiple therapeutic cargoes. Notably, we focused on two key transporting targets, transferrin receptor known as TfR and CD98 heavy chain. TfR, a well-known iron transport receptor, swiftly delivers cargo to the endolysosomal system, while CD98 heavy chain antigrowth and amino acid transport complexes target cargo primarily across the endothelial cell surface. Both receptors enabled effective delivery of functional cargoes, including antibodies and proteins to target cells within the central nervous system. Having multiple receptor targets allows us to tailor brain uptake optimizing efficacy and safety. Our approach with ABC is distinguished by its versatility, tunability, and translatability. Our ABC technology is versatile and can accommodate a wide range of cargoes from antibodies to nucleic acids, thus enhancing its application across neurodegenerative diseases. Tunability is core to our technology, utilizing a diverse panel of binders with varying affinities to blood-brain barrier receptors to precisely match different cargoes, optimizing therapeutic efficacy while ensuring safety. Additionally, translatability from preclinical to clinical species is a key feature and can be important in accelerating our path to clinical trials, ultimately enabling efficient delivery of innovative treatments to patients. ABC’s capabilities underscore Alector’s commitment to advancing therapies for neurodegenerative diseases by overcoming challenges in drug delivery to the brain, positioning us at the forefront of neurodegenerative disease drug development. Looking ahead, we will continue to provide updates on our ABC programs as they progress, reinforcing our dedication to pioneering new frontiers in brain health. Now I’ll turn the call over to Marc for an update on our financial results and milestone outlook.

Thank you, Sara. We summarized our second quarter 2024 financial results in the press release that we made available after the market closed today. First, I’ll highlight that we remain well-funded to execute our strategic objectives. We ended the second quarter of 2024 with a strong cash position of $503.3 million. Our cash runway extends through 2026, demonstrating robust financial preparedness for future growth and financial strength through the completion of key milestones, including the AL002 INVOKE-2 Phase 2 data readout and the pivotal INFRONT-3 Phase 3 data readout for latozinemab, with the runway coverage extending approximately a year beyond the INFRONT-3 readout. Turning now to 2024 financial guidance. We continue to anticipate collaboration revenue to be between $60 million and $70 million. We have tightened our total research and development guidance to be between $210 million and $220 million. We have reiterated our total general and administrative guidance to be between $60 million and $70 million. We are well capitalized for the robust cash position and remain focused on advancing our later stage and ABC portfolio. We look forward to providing additional updates as we progress our work. That concludes our prepared comments for today’s call. Operator, you may now open the line for questions.

And our first question comes from Paul Matteis with Stifel.

Hi, there. This is Julian on for Paul. Thanks so much for taking our question. So a couple from me. On TREM2, do you mind just reminding everybody what proportion of data from participants out to 48 weeks and 96 weeks and somewhere in between you expect in this upcoming readout? And also do you plan on rolling over APOE4 homozygotes that were in the placebo group to your long-term extension study? And then also on latozinemab, can you just clarify what exactly does it mean that the FDA would consider plasma and CSF PGRN as confirmatory? I guess to me, it seems a little unusual as biomarkers – for a biomarker to be confirmatory evidence of clinical benefit. Usually, it’s predicting clinical benefit in the absence of clinical data. So any additional color would be really helpful there. Thank you.

This is Gary. I can take that. So I think your first question was around TREM2, what is the – how many patients do we have at the different time points. So all of the patients, all the completers, which we expect to be around 250, will complete 48 weeks of treatment. And then we’ll have about half of those, we’ll have 72 weeks of treatment and about a third will have 96 weeks of treatment. And I want to just remind you that our LTE remains blinded to original treatment assignment, which means that we’ll still be able to collect meaningful data on biomarkers and safety, but also on clinical outcomes, given the blindedness. And that will be up to six months later, we’ll have a minimum of 72 weeks of data on all patients and then six months later, two years of data. Your second question was about the LTE, I think, about the rollover of APOE homozygotes. No, we are rolling over the placebo group, which is – like the rest of the study, the current study population does not include APOE4 homozygotes anymore. They were – we stopped enrollment early in the study and discontinued them because we saw more severe MRI changes resembling ARIA in the APOE4 homozygotes. So they are not rolling over in the LTE. And I think your last question was about latozinemab, what does it mean to be confirmatory evidence in clinical benefit? It means that if we have a clinical – a positive result on the primary clinical outcome measure, which is the CDR – that the CDR FTD – FTLD NAC, it’s basically a CDR with two additional modules for behavior and language difficulties, which FTD patients have. And what it means is that we discussed some specifics about some of the biomarkers, imaging and fluid biomarkers that we would use, including GFAP and NfL and region of interest volumetric – should you say, volumetric MRI, that they would be – if we were to see effects on these biomarkers, that would be added confirmatory evidence of the effect on the clinical outcome measure. It does not mean in this context that it would be – that the biomarkers would be surrogates for the clinical outcome measure. However, that said, we are also fully cognizant that there are many similarities here in FTD to drugs like tofersen that was approved based on an accelerated approval based on some of the same biomarkers, NfL predominantly. And likewise, in this study, we see these biomarkers as prognostic and FDA, we had a discussion with this about those similarities. And so if for some reason, and we don’t expect this, but if – especially based on our Phase 2 data, which was very promising, we expect that if we did – if we were disappointed by the clinical outcome, but we saw directional effects, I mean, we think that a backup strategy could be an accelerated approval approach. We have not discussed that with FDA yet, but I think that their – we’re encouraged by their endorsement of the biomarkers that we suggested.

Got it. Make sense. Thanks. Appreciate it.

One moment for our next question. And our next question comes from Alec Stranahan with Bank of America.

Hi. This is Susan on for Alec. I had a question about INVOKE-2. How should we be thinking about patients enrolling in a long-term extension study for INVOKE-2 in terms of tolerability and efficacy?

Yes. Thank you, Susan. So how do we think about patients enrolling in LTE around efficacy and safety? Well, first, I have to tell you that we’re very pleased by the fact that up to this point, 95% of patients that have been eligible to roll over and that’s most of the patients by far, have decided to do so and are now in the LTE. Some have actually completed the LTE. And in terms of efficacy, we will be – we don’t know. We are still blinded, and we haven’t looked at efficacy. We will include some of the LTE data that will have been collected up to that time in our sensitivity analysis as the time later this year when we lock the database and have a look at the data. With regard to safety, there really haven’t been any significant safety signals beyond the MRI signal that resembles ARIA, which we’ve described in a lot of detail. And also a small number of infusion reactions, which is not unexpected with the monoclonal antibody.

Thank you, Susan. Operator, we’re ready for the next question.

One moment for our next question. And our next question comes from Jeffrey Hung with Morgan Stanley.

Hi. This is Michael Reid on for Jeffrey. Thank you for taking our question. Going back to the baseline INVOKE data. So two-thirds had mild cognitive impairment and a third had mild dementia. But you also saw mean amyloid like PET centroids of around 100 at baseline. Are you able to say whether that differed between the two populations in terms of cognitive impairment versus dementia? And also it’s not a full capture of the total trial population. Is that something that will get resolved? Thanks. And I have a follow-up.

Yes. So I can’t tell you – I don’t – we don’t have the data broken down by the MCI and mild AD regarding the centiloid levels. I don’t have that. We just looked at the aggregate centiloid levels. And let me see, did I miss your other question? I didn’t catch the question about full capture. I didn’t quite follow what you’re asking.

Sorry about that. I just meant – like I thought it was like in the low – like mid-200s and the trial had enrolled more patients, like is mean amyloid PET at baseline something that would be captured through the whole population or just like the 244?

Yes. So at the – this is baseline characteristics. So this was – what we reported out on was the number of patients that or the patients that had used amyloid PET for inclusion and therefore had a baseline amyloid PET scan. So that would include everyone up to that point that – for which we had data, which would be everyone because they were fully enrolled. Yes. So that’s the – I hope this answers your question.

Yes. No, that’s very helpful. And then just as a quick follow-on. Like what sort of – follow-up. What would you think is the expectations for centiloid reduction in INVOKE?

Yes, that’s a good question. So since we see this MRI finding that resembles ARIA in every manner. We wouldn’t be surprised to lowering amyloid. We also wouldn’t be surprised given that the fact that this is a – we believe that AL002 will restore microglial function. And we know that microglia are involved in compacting and also clearing amyloid and other misfolded proteins during – under regular conditions, and also are involved in the removal of amyloid after they get tagged by anti-amyloid antibodies. So it doesn’t surprise us that we would see that. In terms of the expectation, we don’t know yet and we haven’t yet looked. But I would tell you that we don’t see – I think this is a very important point. This is really – this is a truly different mechanism than anti-amyloid antibodies. And it has – as we described in our presentation, by restoring microglial function, we’re restoring many different downstream mechanisms by which microglia preserve brain health. So we don’t – this is really not intended to be just an amyloid-lowering agent. Therefore, if we do or do not reach the amyloid 24 centiloid level that seems to be a necessary condition for clinical efficacy for the anti-amyloid antibodies, that’s not going to bother us. And we’re not going to make a decision based on that because this really goes beyond amyloid clearance, this mechanism.

Thank you so much. I really appreciate that.

One moment for our next question. And our next question comes from Pete Stavropoulos with Cantor Fitzgerald.

Hi. This is Samantha on the line for Pete. Thanks for taking our questions. Firstly, for TREM2, can you give us an idea of what to expect for the first data release next quarter? What’s the bar for moving this program forward into a later-stage study? Will it be biomarker driven? Or do you need to see a clear signal of clinical efficacy? And regarding safety monitoring, is it safe to assume that ARIA-like observations have been minimized due to the protocol changes? Has there been any new KOL feedback on what might be driving these observations? And finally, regarding the ABC technology, could you describe the tissues or cell types where CD98 is expressed and outline any theoretical risks associated with targeting CD98? Thanks so much.

Okay. Thanks. Good questions. Thanks, Samantha. So what to expect in terms of – what do you expect in terms of what data we’re going to report. We’re going to – we’ll have a press release, and that press release will include not only the typical top line primary clinical outcomes and safety, but we’re also going to include data on the relevant biomarkers. As I said, we were making a decision based on a combination of clinical, functional, and biomarker readouts, and we have lots of biomarkers. So all of those that are relevant to making a decision, particularly the Alzheimer’s physiology biomarkers will be included. We’ll be reporting out on all of those at the same time as with the press release, not just top line. And what is the bar to advance? I just said it, right? It’s some combination there – and seeing consistency across those clinical and biomarker outcomes that – showing that we are slowing disease progression because that’s – at the end of the day, that’s what we’re out to do. So it’s not going to be about hitting a p-value on just the clinical outcome measure. If we do or don’t, if we see directional effects there, consistent with biomarker directional effects showing slowing of disease progression for us, that’s a win. And we’ll be very excited to see that and advance the compound. You also asked about ARIA. Is it – do we think it’s minimized? Well, what we do know is that when we – after we dropped the APOE4, we then added MRI surveillance. And MRI surveillance, actually, we were doing it every four weeks before each dose titration for the first three months and then less often after that. We know that likely increases the amount of ARIA you’re going to find because you’re looking every four weeks for radiographic ARIA, which is 90% of the ARIA. Lilly, by the way, reported at that in their donanemab Phase 3 program that date when they added ARIA surveillance, increased the ARIA surveillance. Also they saw – in addition, they see more higher incidents, they also found that the severity was reduced. And we’ve also observed that, as I said, the incidence and severity of ARIA has actually come down for us in our study under the current population. Is it minimized? Meaning is that as low as it can go? I don’t know. We don’t know that for sure, but I can tell you that in our long-term extension, one of the things that we’re exploring is whether starting at a lower dose and titrating more slowly akin to what they’ve been doing in the anti-amyloid antibody trials could reduce the ARIA signal. So that – we hope to learn that as well in our long-term extension study. And what does this – what does the mechanism – yes. That was the mechanism, I’m sorry, well, I think the last question was talking about what about mechanism. Everyone we show this to says, this has to be related to amyloid clearance. We’re very – I’m kind of conservative. So I’ll wait till I see the data, but I think that’s a good bet.

Yes, I can add to this a little bit. There are data even in humans that microglia in a TREM2-dependent manner can contain A-beta without removing it. They form a barrier between the A-beta plus and the surrounding neurons and they basically make the A-beta can no longer injure the neurons. So you can get therapeutic benefit even on A-beta without removal of A-beta if you recruit microglia. And in addition, yes, as Gary said, the microglia are responsible for replacement of damaged synaptic connections in Alzheimer's disease; up to 50% of the synapses can be damaged. They are responsible for the replacement of damaged myelin. There is significant myelin damage in Alzheimer's disease. They are responsible for direct neural transmission without functional microglia. Neural transmission is abnormal. So there are a lot of other activities that should translate to clinical benefit independent of A-beta pathology.

And just on the cash runway guidance, Corinne. So we reiterated that our runway is through 2026, and that's a full two years beyond the expected TREM2 data readout end of this year and a full year beyond expected FTD Phase 3 readout end of next year and doesn't assume any opt-in from AbbVie or other milestones or business development. So we think that's a pretty healthy runway and a strong position as it relates to the Alector Brain Carrier portfolio. We're going to provide more updates as that program progresses – as those programs progress. We haven't said specifically what that would advance – those programs through. But you could expect that that would be through INDs on programs.

One moment for our next question. Our next question then comes from Graig Suvannavejh with Mizuho Securities.

Thank you very much for taking my question. And congrats on the progress. Earlier in your prepared remarks, you had mentioned I think the analytical methodology that you will apply to your INVOKE-2 trial. And I wanted to ask about how that particular methodology might compare with others in Alzheimer's disease. It does seem as if you've taken an innovative approach here with the view that you're hoping to increase the powering of the study, but someone who may not be as well-versed in that methodology. Could you just speak to the differences between how others have analyzed their Alzheimer's trial? Thanks.

Yes. Yes. So this proportional method that we're using, or proportional MMRM, as I mentioned, it allows us to look at – it allows you to – it's really particularly helpful in the common closed design where we have patients with different durations of treatment and we can use all of that data, as I outlined. This is a novel method, but it has been used before in Alzheimer's trials and one of the DIAN studies it was used. And also, I believe that really used it as a sensitivity analysis in their Phase 2 and possibly one ASI, I don't remember which study that was. So it is novel, but others have explored it. Yes, I think it's – for us, we thought given the common close design and given that we were trying to make this really a biomarker-rich study, we would have a lot of different types of readouts. We thought that this would be the best – really – and I should say AbbVie agreed around this design some years ago before the study started. So yes, I mean, we'll also do sensitivity analysis with other more traditional approaches, but this is our primary outcome.

Thanks for the question, Graig. Operator, I think we have time for one more.

Our next question then comes from Corinne Jenkins with Goldman Sachs.

Thanks, guys. Good afternoon. Maybe could you just talk a little bit – I think I understand, but if you could just square the comments you've made around containing the mechanism, is it related to amyloid clearance, but you don't have to get the same degree of centiloid reduction that going to see clinical effect. And then maybe you could expand a little bit more on the cash runway guidance, particularly with respect to which activities around the ABC platform are going to be embedded within that time frame.

Yes. So I'll take the first one, Corinne. Thanks. Good question. Yes. So what I was referring to is that – so our hypothesis is that increasing TREM2 signaling triggers a number of other signaling pathways that allow for a proliferation of microglia, increased function and survival. We think that this is going to shift the population of microglia. We know that with aging and with neurodegenerative disease, you have senescence of microglia. So by shifting the microglia to more healthy and active and functional microglia, we'll have all those beneficial effects that come – I won't repeat that come from microglia, including amyloid clearance and clearance of misfolded proteins. And by the way, it's interesting that we're focused not on amyloid because of the potential ARIA-like signal. But there's lots of comorbidities that are usually seen with Alzheimer's disease. So microglia are not selective for amyloid; they would clear TDP-43 and they would clear other alpha-synuclein and the like. So we think this is why we're so excited about this mechanism. When I say it doesn’t need to reach the 24 centiloid level, I think for an anti-amyloid antibody, where that's what it does; it lowers amyloid. It looks like there's now plenty – lots of data showing that curve. You've seen the graphs, I'm sure we show that you need to get to a certain level before you start seeing clinical benefit. I mean the gantenerumab study is an example of one that didn't quite get there. And in aducanumab, one of the studies didn't get there; didn't have clinical, the clinical data were less robust. So it looks like you have to get down to this 24 centiloid level if that's your mechanism you're using. This mechanism goes beyond that. Yes, we might have amyloid clearance, but we think that all of these downstream mechanisms are at play. And so we're not going to judge this mechanism of action based just on the amyloid clearance, the amount of amyloid clearance we see. I hope that – did that help or did that answer the question?

And just on the cash runway guidance, Corinne. So we reiterated that our runway is through 2026, and that's a full two years beyond the expected TREM2 data readout end of this year and a full year beyond expected FTD Phase 3 readout end of next year and doesn't assume any opt-in from AbbVie or other milestones or business development. So we think that's a pretty healthy runway and a strong position as it relates to the Alector Brain Carrier portfolio. We're going to provide more updates as that program progresses – as those programs progress. We haven't said specifically what that would advance those programs through. But you could expect that that would be through INDs on programs.

And this concludes the question-and-answer session. I would now like to turn it back to Marc for his closing remarks.

Thanks, everyone, for the thoughtful questions. Before we end the call, I’d just like to share, we will be participating in a number of upcoming conferences, including the Morgan Stanley Annual Global Healthcare Conference, September 5th, in New York; H.C. Wainwright's Global Investment Conference on September 9th in New York; and Cantor's Global Healthcare Conference on September 17th in New York. Thank you again for your time and attention today.

And thank you for your participation in today's conference. This does conclude the program. You may now disconnect.