Alector, Inc. (ALEC) September 15, 2026 Conference Transcript

Good morning, everyone. I'm Sean Lyman, Head of US SMIDCAP Biotech Equity Research here at Morgan Stanley, and welcome to a Morgan Stanley Global Healthcare Conference. Before we commence, just to make you aware of some important disclosures, for those disclosures, please go to the Morgan Stanley Research Disclosure website at www.morganstanley.com forward slash research disclosures, and if you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have the pleasure to host Elektor with their CEO, Arnon Rosenthal, CBO and CFO, Neil Berkley, and Eric Brown, Senior Director, Antibody Discovery and Protein Engineering. Welcome, welcome, gentlemen. Maybe just some macro considerations to begin with before we dig into Elektor. So, how are you thinking about the rise in China-originated innovation, and is it changing your competitive positioning on your R&D and BD playbook?

So people are still suffering from cancer, from neurodegenerative diseases, from metabolic disorders. So in my view, innovation in medicine is helpful and essential regardless of where it is coming from. So I hope to see continuous innovation from the U.S. and from anywhere else in the world. And I think that innovation sort of promotes even more innovation. So I do see it positively. For us specifically, so far the main competition or the main innovation from China is coming from immunology and cancer. Now the generation is a more complex field with less clear pathways of how to get approval, less obvious drug targets and drugs. So at this point, we don't see as much competition, and based on the inbound interest that we have from large pharma, we are still sort of a significant force in innovative medicine for another generation, and we are actually trying to use the innovation in China instead of, like, fear it. So we work extensively with Chinese companies on the research level. We are looking at conducting possibly even clinical trials in China. It means we are focusing on Alzheimer's disease and Parkinson's disease, and the available population in China is significantly larger, and they are just starting now to get sort of updated with regard to clinical trials. So we are exploring clinical trials in China. And we are absolutely working with Chinese companies to advance our own programs.

Amazing. Thank you. And second question on the macro, are you implementing AI across your business? And if so, can you give an example where you've seen a benefit on cost, a benefit of function, maybe even a benefit on POS assumptions?

Yes, we are implementing AI in every aspect of the company. And at this point, the main advantage or benefit is efficiency. We think we can achieve more with lower costs and fewer people. So we are using AI to file our regulatory sort of applications. We are using AI to review business contracts. We are using AI to help design clinical trials. So, every aspect of the company is assisted by AI. At this point, I think it's fair to say that actual drug discovery, like actual innovation, is still not there for AI. I don't think there are enough data to really predict a new drug target. It means you can get help with analyzing a lot of genetic data and clinical data, but I still think you need the human mind to actually develop novel therapeutics. So at this point, we see AI as assisting with efficiency, but not really as much with actual innovation.

Thank you, Anand. And last question on the macro before we dig into the heart of Elektor, but even thinking generally, or maybe specific to Elektor, which policy variable do you consider the most important at the moment? Is it like the FDA? Is it Medicare negotiations, MFN, tariffs, global pricing? There's a lot to think about, but how do you generally think about those elements, and what's the most important?

As a company that's sort of re-entering the clinic in a few months, the most relevant for us is interactions with the FDA, and the sort of the FDA, in a way, innovation or changes that we are really relying on are the modernization acts, like that reduces the amount of animal usage. Basically, the main cost in entering the clinic is non-human primate studies, and the FDA is proposing alternatives to non-human primates, and maybe shorter toxicity studies, and we are sort of relying heavily on that. I mean, the second main thing, big thing, is the surrogate biomarkers for clinical approval. I mean, so I think we are spending a significant amount of time developing and trying to validate biomarkers to both facilitate the clinical development and ultimately clinical approval. I think the FDA is relying more and more on biomarkers, and the three anti-A-beta drugs that were approved were initially approved based on serogate biomarkers, the beta-amyloid imaging. I think more therapeutics are being approved based on serogate biomarkers, so that's something we are looking at. And the third thing is the increased frequency of interactions with the FDA. The FDA advanced multiple tools like Interact and pre-IND meetings that enables us to elicit feedback before we design our clinical trials. So we are using this extensively, asking the FDA what their expectations are, what would be accepted on them, both with regard to clinical design, with starting doses, with toxicity. We've studied how many species we need for our pre-IND programs. So we are interacting very sort of constantly with the FDA to elicit information. Wonderful.

Thank you. Thank you, Anand. So maybe some level-setting questions here to begin. So talk about the strategic shift to ABC. So a year ago, Elector had a Phase III program in FTD-GRN and a Phase II program in Alzheimer's. Today, need and remains. The GSK collaboration is winding down. The next clinical start is expected in 27. So how would you define to investors what Elector is today?

So Elector has not really changed conceptually and philosophically. We were started as a company that is dedicated to cure all degenerative disorders, to eradicate Alzheimer's disease and Parkinson's disease and low body dementia. and frontotemporal dementia, and our commitment to this mission remains. We took six drugs to the clinic under a certain hypothesis that brain-specific immune checkpoints could provide effective therapeutics for Alzheimer's disease and other neurodegenerative disorders. This specific hypothesis didn't pan out so far, but we are continuing. Now we are advancing enzyme replacement therapies for neurodegeneration, blocking misfolded proteins for neurodegeneration. So we are continuing to explore hypotheses for neurodegeneration with multiple different targets. We are advancing technology that enables delivery of enzymes, RNA, siRNA, and antibodies to the brain. So, yes, we are, means we were a phase three company, we are a preclinical company now, but we expect to be in the clinic by early next year, so we will again become a clinical company. And our mission has not changed just the type of drug targets that we are advancing as we've evolved.

Can I just add one? You know, also the team has been working on the electrobrain carrier for seven years. You know, this is not, you know, something that we started, you know, last year. This is something that's got a really deep foundation and very good science. And so we've been at the forefront of the blood-brain delivery space as well for many years now.

Yes, so it's a very important point. Maybe the core value driver today seems to ask the AVC platform. Can you give us a bit of a detail on the AVC platform? And you mentioned first patient dosing. Can you be a bit more precise on when that might occur? Sure.

I mean, I think just to give a brief overview of the platform, as Neil said, we started working on this well over seven years ago as a way to deliver our highly novel antibody targets into the brain. And as we've worked on it over the years, we've realized that it actually enables the delivery of so much more than just antibodies, which is how we built out our Gcase program, which simply wouldn't work without blood-brain barrier technology. And recently, we've pivoted towards sRNAs, where really pairing sRNA and blood-brain barrier really gives you amazing therapeutic potential. Like, we've seen knockdown of up to 90% in certain targets in the brain. And then to get back to the last part of your question, we are looking to dose very early in Q2 in 2027. I believe Arnon might know a little bit more on the specifics, but the platform is much more than just the A-beta drug. Sure.

Yes, so we have five drugs that we are advancing to the clinic now. The most advanced one is an anti-Ibita antibody, which is brain-unabled, that is expected to be in the clinic by April next year. We have tau-sRNA, which is brain-unabled, and there is sort of some supportive data from the Biogen Ionics clinical trial. We have tau-sRNA, which is brain-unabled. Again, that's alpha-synuclein, SIRNA, which is brain-enabled alpha-synuclein is the hallmark misfolded protein in Parkinson's disease, and we have enzyme-inversion therapy for Parkinson's disease and Lewy body dementia. This is a GK, which is a lysosomal enzyme that's mutated in a large percentage of Parkinson's patients and Lewy body dementia patients.

Sure. Maybe just on the resourcing of the platform, so you reduced workforce significantly. So what capabilities sort of remain in-house, and, you know, do you have the team, you know, in-house to move AL137, you know, through?

Yeah, we absolutely have the capabilities. We did reduce the team, but that was actually an opportunity for us to implement a lot of AI tools to really compensate for the reduction in end-counts. We retained all our basic R&D capabilities, like in drug discovery, antibody and protein engineering, preclinical, non-clinical studies. We have a clinical team that's advancing our AL137. So we are a more nimble team, but we didn't really lose any core capabilities. And because of our smaller size, we are really implementing more AI to substitute for headcounts. A lot of things that were done manually are now done to sort of computerized systems. For example, we had a very large clinical operation team. We are sort of supplementing it with AI. And we are using a lot of outsourcing, including from China, to really substitute for our sort of smaller size. So we think that with regard to capabilities, we will found alternatives to the larger headcount.

Sure. Thank you. And with A137, so the first patient dose early next year, how would you phrase the data map and milestones looking forward over the next few years? What would it look like?

So we are going to start with healthy, like, again, this is an anti-beta amyloid antibody that's brain-enabled. It has recognized the so-called pyroglutamate epitope on the beta amyloid peptide, which we think is the most toxic and aggregating sort of stimulator version of a beta. We have a very potent blood-band barrier shuttle that brings a lot of drugs to the brain at very low dose. Our brain shuttle, because of the unique side that it binds the transferring receptor, reduces the anemia risk. This enables us to use what's called the full effector function, full ability to recruit immune cells to remove beta-amyloid plaque. So we are targeting a best-in-class drug that's going to be delivered subcutaneously once a month, and we are going to start seeing data in healthy volunteers by sort of Q2 next year, and the healthy volunteers data here will show us pharmacokinetics, which means we'll have exposure data in the CSF, which in our case, based on non-human primary data, We will reflect very well on brain exposure, and we will show multiple safety features, like anemia is a major risk factor for the brain shuttle that everyone is using. We are going to look at anemia. We are going to look at infusion reactions that competitors like Trantunamab are suffering from. We are going to show that subcutaneous delivery does lead to efficient exposure. So we'll have, by mid-year, next year, we will have a really good package of pharmacokinetics and safety, and right after that, we are going to move to patients, and with brain shuttle, as was shown by, again, the Roche antibody, within three months, you start seeing significant impact on the Alzheimer's pathology. So by PET imaging, you should see reduction in A-beta plaques. By serum and CSF biomarkers, you should see reduction in, for example, P-tau-217, which is a reflector of A-beta pathology. We will be able to show minimized sort of effect on ARIA and other safety features. So by the end of 2027, early 2028, we will have a good package of clinical benefit based on biomarkers and safety.

Sure. Thank you. And just to maybe pinpoint to investors, what's the strongest translational evidence that you have that you can deliver meaningful brain exposure in a safe manner?

It means we have conducted IND-enabling toxicity studies and pharmacokinetic studies in non-human primates. We see with subcontinuous delivery at low dose, single-digit dose, we see brain exposure that significantly exceeds what in our calculation was reported by any other either naked antibody or antibody with brain shutdowns. So we see several-fold higher brain exposure. We see a very manageable hematologic effect, and we don't see adverse effects associated with anemia. And, again, our data suggests that a monthly subcutaneous delivery will be more than sufficient to get maximal brain exposure.

And just to chime in a little bit, on the platform side, But beyond the A-beta antibody, if we look at our enzyme or our sRNA program, because we're able to utilize an effectorless FC because it's not part of the mechanism, we've dosed at very high levels in non-human primates up to 250 mg per kg, and we've seen no effect on hematological parameters. So there's an additional, like, layer of safety on the platform.

Sure, sure. That's very important. I guess thinking about the platform more broadly and your competitors. So, Denali's approval validates, you know, TFR and mediated transport, but also sets a pretty high competitive bar in our view. You know, what does ABC do differently? You know, it's a transport efficiency, brain distribution, dosing, manufacturability, or what we just discussed, the hematologic safety.

I would argue that the Denali approval sets really a good standard for the field, but it's also, I would say, a relatively low bar. In a sense, they picked a really good area to start with, right? So it's a rare disease where you can tolerate, you know, a not great route of exposure. So they're doing weekly IV, right, because they need that to drive enough enzyme in. Because it's an enzyme replacement therapy where there's no copy of the native enzyme, you only need to get delivery of a very low absolute amount of enzyme into cells in the brain to see a large therapeutic effect. So it really is a great beachhead drug. But if we compare our drugs to theirs and what's been reported in the literature, the main difference that we see is much higher absolute level of brain uptake. So we've seen this both with antibody cargos, with sRNA cargos. With their enzyme cargo, they don't actually show the absolute level of brain uptake, but we expect, based on what we see, which is around or higher than 10 nanomolar exposure in the brain with our GKs drug, that we're also seeing significantly higher uptake of an enzyme replacement drug. And for anything other than, you know, an absolute knockout, like for the G case, we're looking to actually replace an enzyme that is half of the normal activity level. So rather than just getting a tiny amount in to catalytically remove a highly increased substrate, we need to actually double the amount of therapeutic enzyme that's in the native body. And we've shown that we can do that in the brains of non-human primates. So I'd say first and foremost, the absolute level of brain uptake that we're able to drive, and especially the level of uptake we're able to drive into cells, is one of the main drivers.

Sure. Thank you. And I have 137 targets pyroglue form of 8-beta with potential monthly sub-tosing. Can you comment on the differentiation on target specificity and on administration frequency? Yeah, that's a great question, actually.

It means the two anti-A beta antibodies that are on the market now, one of them is targeting the pyroglutamate from Lili donanomab, and the other is targeting a soluble profibril, like the N-terminal of soluble profibril. This is lacunamab. They show generally similar efficacy, donanomab, which targets the pyroglutamate. Incrementally show a deeper removal of A-beta plaques, faster removal of A-beta plaques, and incrementally possibly better clinical outcome. So we chose the pyroglutamide because of the comparative clinical data of dononamab and lacunamab. The other advantage of the pyroglutamide is that there is no pyroglutamide version of the A-beta peptide in the periphery, so there is no what's so-called zinc effect. The antibody doesn't get stuck in the periphery. It all goes to the brain, so we think that at lower dose you can get the same efficacy. The subcutaneous delivery and monthly doses are really related to the potency of our antibody and to the potency of the brain shuttle. Once again, as Eric said, we have a very potent brain shuttle that enables several-fold higher exposure in the brain compared to competitor, and this really enables us subcutaneous delivery and monthly dosing. And we think that the pyroglutamide target will be very effective in removing A-beta plaque.

Wonderful. And what do you think 137 would need to demonstrate to be commercially relevant versus approved anti-amyloid antibodies? Is it materially lower ARIA monthly subcut administration, the better plaque clearance, or some combination?

To a large degree, all of the above. I think you need to have extensive removal of A-beta plaques. We know, based on the first generation of antibodies, donanumab, lacunumab, adekunumab, gantanurumab, and cranuzumab, that partial removal of A-beta plaques does not lead to clinical benefit. So the Roche antibody Gantanuramab reduced A-bita plaques by 60-70%. It was not associated with any clinical benefit. You need to reduce A-bita plaques by 80-90%, 100% to see clinical benefit. So extensive removal of A-beta plaques is really essential. One of the main sort of predicted benefits of brain shuttle-associated anti-A-beta antibodies is reduction in ARIA or elimination of ARIA. So we have to show that, and you have several questions around the ARIA. This is actually a great question. The hypothesis is that with brain shuffle, the mode of entry of the drug to the brain will eliminate ARIA, but so far we have only one example of that with the Roche antibodies, so we actually have to see if that's the case. So we need to show extensive and rapid A-bita plaque removal. We need to show no ARIA. I think the subcutaneous delivery will be a significant advantage. The Roche-Trentunumab is still being delivered with IV infusion that requires infusion centers, and it's much less convenient and scalable. So being able to deliver drugs subcutaneously likely at home once a month would be a significant advantage. And also minimal anemia or hematologic adverse effects, which are the side effects that come with the brain shuttle technology. So I think you'll have to be competitive. You'll have to show all of the above.

Sure. Moving on a little bit to just some financing and strategic questions. So you finished the period, I think, with around $170 million cash on balance sheet. Does that get you through the proof-of-concept data, or does it only get you to the initial dosing?

No, I mean, our current capital allows us to get into patient dosing, the patient trial. Got you.

We have a lot of flexibility financial. We announced that we have enough resources through 2027, but we have a lot of flexibility, Like how we use the resources, like how aggressively we advance other programs. And also we have a lot of inbound sort of partnering interests that could or would bring additional resources. So we think we will be able to go to absolutely proof of concept in patients with the resources that we have and we'll gather.

All right, so that leads into the next question, which is, you know, is the financing strategy to partner the ABC platform, partner individual assets, or advance 137 independently and raise against early human data?

Maybe I'll take that. I mean, I think we look at – the way we look at partnering is that, you know, we're asset-focused on partnering. We do not typically look at broad platform deals and organization of the platform. You know, we're in the fortunate situation to have multiple assets, and across the board, you know, there are companies who are interested in all the different assets we're doing. We are very focused on moving A-beta through to clinical proof of concept ourselves, and, you know, we are open to discussing other programs and partnering opportunities. We're very active in the partnering space and hope to be able to close one of those in the short term.

Got you. Thank you. I look forward to that. Moving on a little bit on to some of the follow-on platform programs, and AL164 is a modified version of AL064, moving into IND enabling studies. Why the reformulation? And can you talk about the changes you've made that increases your confidence in the program?

Yeah, so AL064, in a sense, was a proof-of-concept study that we could deliver and significantly knock down tau in the non-human primate brain. Between AL064 and AL164, we simply made some tweaks to the chemical modification on the sRNA using well-validated chemical modifications that are designed to increase the stability of the sRNA. And this gives us really good confidence because already with 064, we were seeing significant knockdown of CSF tau that was lasting up to 70 days post-administration, and now with stability-enhancing chemical modifications, and also we're seeing stronger initial knockdown for AL164, especially with subcutaneous administration than we saw with AL064. So putting those pieces of data together, it gives us really good confidence that we'll have both high level of absolute knockdown and also a sustained knockdown of both tau mRNA and tau protein.

So we now have data with 167 in non-human primates that sort of, you know, are on the corporate deck that we just posted. And, yeah, with 164, we do see over 70% knockdown of tau mRNA with subcutaneous delivery. And we think, based on our other data, that it's going to be durable for at least three months. So we have a potent, what means we don't see any safety signals, so we think we have a potent, safe, and durable anti-tao drug that can be delivered peripherally, subcontinuously, and could be very competitive with the biogen ionic drugs. Sure.

It sounds really interesting. Maybe moving on to ALO5, I showed increased GKs activity in NHPs, you know, with no hematologic findings. I believe others have ATV GKs program, too, like Denali. So what's the differentiation, and what is the IND timing?

So I'll take the differentiation part. So we extensively engineered our GKs enzyme to have both greatly enhanced activity, like more than 50-fold increase in activity over the native enzyme, But also greatly enhanced stability, so also 50-fold increase in stability over the wild-type enzyme. And then we had to search and pair it with the exact right anti-TFR-ABC. And really only, we conducted multiple NHP studies. It was only when we paired the most active G-case with the most optimized TFR that we were able to see that 100% increase in activity in NHP brain. And to my knowledge, Denali has not shown NHP data showing that level of it. I haven't actually seen any NHP data for their program, and one thing we have seen working over this program for seven to eight years is that really the translation from mouse to NHP is the biggest hurdle. There are a lot of things we tried that work in the mouse and show great data, and then you put in the NHP and they just don't show the same level. So we think having that level of data in non-human primates is what makes us really confident we can move this program forward.

Yes, so basically our main differentiation is that our drug actually works in non-human Non-human primates, that's a good predictor for humans, and we are not aware. Like multiple companies, Denali, Roche, reported data in rodents. Rodents are much easier to cure than non-human primates and humans, so the transition from rodents to non-human primates is something that we were the only ones who were able to demonstrate as far as we know.

Thank you. And beyond 137, which program offers the fastest path to demonstrating that the APC platform is repeatable versus a single-asset story?

Yeah, after the 137, the second most advanced drug that we have is the tau-SIRNA. So we have two Alzheimer's programs that are advancing to the clinic. For both programs, there are really good imaging and biomarker tools that with a fairly small sort of cohort of patients with a fairly short time frame of three to six months, you can start seeing sort of efficacy sort of for A-beta, the PET imaging for A-beta, the soluble biomarker, PTAO 217, A-beta 40 to 42, These two can give you really good indications of efficacy. For tau, again, tau PET imaging and multiple measurements of total tau and phospho-tau can give you indications of efficacy. So these two Alzheimer's programs, I think, sort of by next year we will start hopefully seeing some data that will indicate that both the drugs themselves and the technologies are working. And beyond that, we have the two Parkinson's programs. One is the enzyme glycine therapy, and the second is the alpha-synuclein sRNA that also is advancing. For example, for alpha-synuclein sRNA, we see 94% knockdown of mRNA with subcutaneous delivery, which is very profound. So we think we have, again, two drugs for Alzheimer's disease, two drugs for Parkinson's disease that look very promising.

All advancing. Fantastic. So you've got five programs advancing towards the clinic. 137 will get data next year. Maybe some differentiation there with subcut dosing, haematological safety, and we look forward to the safety and maybe some efficacy data at some point. You've got cash runway, $170 million finished to the quarter, gets you through 27, will get you through proof-of-concept data. You've got good farmer interest on potential partnering opportunities across the pipeline. Now, I've come to the end of my questions. Is there anything that I've missed or anything I should have asked that I didn't or any message that you'd like to leave investors with?

I think you summarized it really well. But, yes, we have, I mean, I think that, like, some investors defined that we are still in the penalty box because of our past portfolio. We have now a completely new portfolio of drugs that's really much more validated, like the risk associated with anti-A, beta antibodies, tau, siRNA, alpha-synuclein, siRNA, GKs. These are all validated programs based on human genetics, based on past experience. We have great technology to transport these drugs to the brain, so I think our next wave of drugs is much more likely to succeed. We have the resources and the tools and the experience to get it done, and I think people still underestimate the value that we can create in the next two, three years. Wonderful.

Well, that might be a nice place to park our conversation, but thank you for attending. I appreciate you coming. Thank you. Thank you.

Great question.