On Monday, Alector, Inc. (NASDAQ:ALEC) released results from the INVOKE-2 Phase 2 trial evaluating the safety and efficacy of AL002 in slowing disease progression in individuals with early Alzheimer's disease (AD).

AL002 failed to meet the primary endpoint of slowing Alzheimer's clinical progression as measured by the Clinical Dementia Rating Sum of Boxes (CDR-SB).

Also, no treatment effects favored AL002 on secondary clinical and functional endpoints.

The company says treatment with AL002 resulted in sustained target engagement and pharmacodynamic responses indicative of microglial activation.

Similarly, there were no significant effects on Alzheimer's fluid biomarkers favoring AL002, and amyloid PET imaging demonstrated no treatment-related reduction of brain amyloid levels.

As previously reported, INVOKE-2 showed MRI changes resembling amyloid-related imaging abnormalities (ARIA) and infusion-related reactions. ARIA was primarily seen in participants treated with AL002.

Based on the results, Alector is stopping the long-term extension study.

Alector's focus are progranulin-elevating programs, latozinemab, and AL101/GSK4527226, developed in collaboration with GSK Plc (NYSE:GSK).

Topline data from the pivotal INFRONT-3 Phase 3 trial of latozinemab in frontotemporal dementia with a progranulin gene mutation is expected in late 2025 or early 2026.

PROGRESS-AD Phase 2 trial of AL101/GSK4527226 in early AD reached over one-third of its target enrollment of 282 participants. Alector is also advancing its preclinical candidates aimed at a broad and diverse range of protein and enzyme targets.

To align resources with these strategic priorities, Alector is reducing its workforce by approximately 17%.

As of September 30, 2024, Alector has $457.2 million in cash, cash equivalents, and investments, which the company continues to expect will provide a runway through 2026.

William Blair expressed surprise and disappointment at the update, given the strong scientific basis, evidence of target engagement, and potential signs of disease modification tied to ARIA cases. The analyst maintained the Outperform rating.

Despite still seeing promise in TREM2 as a target and in neuroinflammatory modulation, the firm is removing AL002 from its model due to the study's failure, underscoring the difficulties in developing treatments for neurodegenerative diseases.

The analyst also expects AbbVie Inc (NYSE:ABBV) to opt out of the program partnership and forgo the potential $250 million licensing payment.

AbbVie has an exclusive option to develop and commercialize AL002 globally.

Price Action: ALEC stock is down 37.3% at $2.485 at last check Tuesday.

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