fatido/E+ via Getty Images Alector, Inc. (NASDAQ:ALEC) has been able to complete enrollment of its phase 2 INVOKE-2 study, which is using AL002 for the treatment of patients with early-stage Alzheimer's Disease [AD]. With enrollment of this TREM2 activator complete, it expects to report results from this mid-stage study in Q4 of 2024. The thing is that not only is it possible that positive data could be achieved, but that the company is in the process of developing the most advanced TREM2 activator in c ...

SOUTH SAN FRANCISCO, Calif., Jan. 16, 2024 (GLOBE NEWSWIRE) -- Alector, Inc. (NASDAQ:ALEC), a clinical-stage biotechnology company pioneering immuno-neurology, today announced that it intends to offer and sell, subject to market and other conditions, shares of its common stock in an underwritten public offering. In connection with the proposed offering, Alector expects to grant the underwriter a 30-day option to purchase up to an additional 15% of the total number of shares of its common stock offered in th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38792 Alector, Inc. (Exact name of Registrant as specified in its Charter) Delaware 82-2933343 (State or other jurisdiction ...

Financial Data and Key Metrics Changes - Collaboration revenue for Q2 2023 was $56.2 million, down from $79.9 million in Q2 2022 [24] - Total research and development expenses for Q2 2023 were $46.2 million, compared to $54.5 million in Q2 2022 [24] - Total general and administrative expenses for Q2 2023 were $13.6 million, down from $15.8 million in Q2 2022 [24] - Net income for Q2 2023 was $1.4 million or $0.02 per share, compared to $9.9 million or $0.12 per share in Q2 2022 [24] Business Line Data and Key Metrics Changes - The AL002 program is the most advanced TREM2 program in clinical development for Alzheimer's disease worldwide, with enrollment in the INVOKE-2 trial nearly complete [13][17] - The INFRONT-3 trial for latozinemab in frontotemporal dementia is also nearing completion of enrollment [20][21] Market Data and Key Metrics Changes - The company is advancing a broad portfolio of potential first-in-class treatments for brain disorders, addressing a significant public health challenge affecting over 1 billion people globally [10] Company Strategy and Development Direction - Alector is focused on pioneering immuno-neurology therapies that harness the immune system to treat neurodegenerative diseases [10] - The company is developing novel therapies in collaboration with GSK and AbbVie, aiming to enhance microglial activity and address conditions like Alzheimer's and frontotemporal dementia [11][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the progress in neurodegenerative disease drug development and the potential for transformative therapies [9] - The company remains well-funded with a cash position of $630 million, providing a runway through 2025 [24] Other Important Information - Alector plans to complete enrollment in INVOKE-2 and INFRONT-3 trials in Q3 and Q4 2023, respectively [26] - The company is also developing ADP027 for Parkinson's disease, targeting the GPNMD gene [12][29] Q&A Session Summary Question: Additional details on GPNMD research program in Parkinson's disease - The GPNMD program targets a risk gene for Parkinson's disease and aims to modulate lysosomal function [29] Question: Timing for data readout for AL001 - Enrollment for the pivotal study is expected to complete in Q4 2023, with data anticipated in Q3 2025 [30][32] Question: Discussion on biomarkers in the Phase III trial - The primary analysis will focus on clinical treatment effects, supported by biomarker data [35] Question: Details on blood-brain barrier technology - The technology is versatile and can be tailored for different types of antibodies [37] Question: Effect size and powering of the FTD study - The clinical trial design remains unchanged, and the analysis will still provide sufficient power to detect a 40% treatment effect [39] Question: Clarification on TREM2 REA effects - Management is being cautious due to the different mechanism of action compared to existing therapies [43] Question: A-beta scanning in the trial - A-beta PET studies are included in the trial design [45] Question: Progression of asymptomatic patients - There is a smaller number of at-risk subjects, and they are not showing significant progression [47]

Financial Performance - The company reported a net income of $1.4 million for the three months ended June 30, 2023, compared to a net income of $9.9 million for the same period in 2022, indicating a decrease in profitability [71]. - The net loss for the six months ended June 30, 2023, was $44.5 million, compared to a net loss of $34.7 million for the same period in 2022, reflecting an increase in losses [71]. - Net income for Q2 2023 was $1.4 million, a decline of 86.1% compared to $9.9 million in Q2 2022 [82]. - For the six months ended June 30, 2023, collaboration revenue was $72.8 million, down 30.2% from $104.3 million in the same period of 2022 [90]. - Total operating expenses for the six months ended June 30, 2023, were $126.5 million, a decrease of 9.0% from $139.0 million in the same period of 2022 [89]. Revenue and Collaborations - The company has not generated any revenue from product sales and does not expect to do so in the near future, relying on collaborations for funding [72]. - The balance of deferred revenue was $313.9 million as of June 30, 2023, related to the AbbVie and GSK Agreements [74]. - The company received a $17.8 million milestone payment in March 2023 from AbbVie for the dosing of the first patient in a long-term extension trial [74]. - Under the GSK Agreement, the company received $700 million in upfront payments, with potential additional milestone payments of up to $1.5 billion [74]. - Collaboration revenue for Q2 2023 was $56.2 million, down 29.5% from $79.9 million in Q2 2022, primarily due to the termination of the AL003 program and a decrease in revenue from latozinemab programs [83]. Expenses and Cost Management - Research and development expenses decreased to $46.2 million in Q2 2023 from $54.5 million in Q2 2022, a reduction of 15.4% attributed to prioritizing late-stage programs [84]. - General and administrative expenses fell to $13.6 million in Q2 2023 from $15.8 million in Q2 2022, a decrease of 13.9% driven by lower consulting expenses [86]. - The company expects research and development expenses to increase substantially as it advances product candidates through clinical trials and seeks regulatory approvals [77]. - A workforce reduction of approximately 11% was initiated to align resources with strategic priorities, impacting about 30 employees [71]. Cash and Investments - As of June 30, 2023, the company had $630.0 million in cash, cash equivalents, and marketable securities, with an accumulated deficit of $624.2 million [96]. - Cash used in operating activities for the six months ended June 30, 2023, was $91.6 million, primarily due to a net loss of $44.5 million [104]. - Cash used in investing activities for the six months ended June 30, 2023, was $66.9 million, a decrease from $237.9 million in the same period of 2022 [105]. - Cash provided by financing activities for the six months ended June 30, 2023, was $1.9 million, down from $3.4 million in the same period of 2022 [106]. - Approximately $5.4 million of cash exceeded the FDIC insurance limit as of June 30, 2023 [110]. Future Outlook - The company expects to fund operations and capital expenditures through 2025 with existing cash and marketable securities, while anticipating increased expenses related to ongoing activities [99]. - The company plans to complete enrollment in the INFRONT-3 clinical trial for latozinemab in the fourth quarter of 2023, focusing on symptomatic participants [69]. Accounting and Risk Management - There have been no material changes to the company's critical accounting policies and estimates since the last annual report filed on February 28, 2023 [107]. - The company has not had a formal hedging program for foreign currency, and foreign currency transaction gains and losses have not been material [111]. - The company’s investment activities aim to preserve capital while maximizing income from investments without assuming significant risk [110]. - An immediate 100 basis point increase or decrease in interest rates would cause a change in fair value of approximately $2.3 million as of June 30, 2023 [110].

Alector Corporate Overview Forward-Looking Statement This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this presentation are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will” or the negative o ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Alector reported a net loss for the quarter, with total assets decreasing, while its financial position is supported by significant deferred revenue from collaborations [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, the company's cash and equivalents decreased to $669.3 million, with total assets at $748.3 million, and significant long-term deferred revenue of $431.1 million Condensed Consolidated Balance Sheet Highlights (Unaudited, in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $195,555 | $154,323 | | Marketable securities | $473,774 | $558,528 | | Total current assets | $686,002 | $726,435 | | **Total assets** | **$748,342** | **$787,648** | | **Liabilities & Stockholders' Equity** | | | | Deferred revenue, current portion | $61,773 | $48,231 | | Deferred revenue, long-term portion | $431,079 | $443,370 | | Total liabilities | $565,327 | $573,206 | | Total stockholders' equity | $183,015 | $214,442 | | **Total liabilities and stockholders' equity** | **$748,342** | **$787,648** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Collaboration revenue decreased to $16.5 million for Q1 2023, resulting in a slight increase in net loss to $45.9 million, despite a modest decrease in operating expenses Condensed Consolidated Statements of Operations (Unaudited, in thousands) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Collaboration revenue | $16,549 | $24,474 | | Research and development | $51,887 | $53,043 | | General and administrative | $14,777 | $15,554 | | Total operating expenses | $66,664 | $68,597 | | Loss from operations | ($50,115) | ($44,123) | | Net loss | ($45,857) | ($44,617) | | Net loss per share, basic and diluted | ($0.55) | ($0.54) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2023 saw net cash used in operating activities of $48.5 million, a shift from the prior year, while investing activities provided $88.7 million and financing activities provided $1.1 million Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($48,548) | $135,091 | | Net cash provided by (used in) investing activities | $88,701 | ($12,106) | | Net cash provided by financing activities | $1,079 | $2,483 | | **Net increase in cash, cash equivalents, and restricted cash** | **$41,232** | **$125,468** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail collaboration agreements with GSK and AbbVie, generating $11.4 million and $5.2 million respectively, alongside a recent 11% workforce reduction with a $2.1 million charge - The company's collaboration with GSK for latozinemab and AL101 resulted in **$11.4 million** in revenue for Q1 2023. The related deferred revenue was **$433.6 million** as of March 31, 2023[41](index=41&type=chunk) - The collaboration with AbbVie for AL002 generated **$5.2 million** in revenue for Q1 2023. In February 2023, an amendment to the agreement resulted in a **$17.8 million** milestone payment to Alector[43](index=43&type=chunk) - On March 28, 2023, the company initiated a plan to reduce its workforce by approximately **11%** (30 employees) to align resources with strategic priorities. This is expected to result in a one-time charge of approximately **$2.1 million**[57](index=57&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the immuno-neurology pipeline, including latozinemab and AL002/AL101, noting decreased Q1 2023 collaboration revenue and R&D expenses, with existing cash projected to fund operations through 2025 [Overview](index=17&type=section&id=Overview) Alector, a clinical-stage biopharmaceutical company, focuses on immuno-neurology with lead candidates latozinemab, AL002, and AL101, advancing programs through collaborations and a recent 11% workforce reduction - The company is focused on advancing its late-stage immuno-neurology programs: latozinemab for FTD and AL002/AL101 for Alzheimer's Disease[60](index=60&type=chunk) - The pivotal Phase 3 INFRONT-3 trial for latozinemab is on track, with a data readout targeted for early **2025** and a potential BLA filing in late **2025**[60](index=60&type=chunk) - Enrollment for the INVOKE-2 Phase 2 trial of AL002 is expected to complete in **Q3 2023**, with top-line data anticipated by **Q4 2024**[62](index=62&type=chunk) - In March 2023, the company reduced its workforce by approximately **11%** (30 employees) to prioritize its late-stage programs[62](index=62&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q1 2023 saw collaboration revenue decrease by $7.9 million to $16.5 million, while R&D expenses decreased by $1.2 million to $51.9 million, and G&A expenses also declined Results of Operations Comparison (in thousands) | Account | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $16,549 | $24,474 | ($7,925) | | Research and development | $51,887 | $53,043 | ($1,156) | | General and administrative | $14,777 | $15,554 | ($777) | | Loss from operations | ($50,115) | ($44,123) | ($5,992) | | Net loss | ($45,857) | ($44,617) | ($1,240) | R&D Expense Breakdown (in thousands) | Program | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Latozinemab | $4,311 | $9,653 | ($5,342) | | AL101 | $1,772 | $650 | $1,122 | | AL002 | $11,064 | $6,822 | $4,242 | | Other programs | $6,974 | $11,194 | ($4,220) | | Indirect R&D | $27,766 | $24,724 | $3,042 | | **Total R&D** | **$51,887** | **$53,043** | **($1,156)** | [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, Alector held $669.3 million in cash and equivalents, which management believes is sufficient to fund operations through 2025, with future needs dependent on clinical and regulatory progress - The company had **$669.3 million** in cash, cash equivalents, and marketable securities as of March 31, 2023[80](index=80&type=chunk) - Management believes existing cash is sufficient to fund operations and capital requirements through **2025**[81](index=81&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency sensitivities, with a 100 basis point interest rate change impacting investments by $2.4 million, while foreign currency risk is not material - The company is exposed to interest rate risk. An immediate **100 basis point** increase or decrease in interest rates would cause a change in the fair value of its marketable securities of approximately **$2.4 million** as of March 31, 2023[93](index=93&type=chunk) - Foreign currency risk is not considered material as expenses are generally denominated in U.S. dollars[94](index=94&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[96](index=96&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control[97](index=97&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business - Alector is not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on the business[99](index=99&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including limited operating history, ongoing net losses, the need for substantial additional financing, dependence on key clinical candidates and collaborators, and challenges inherent in drug development and regulatory processes - The company has a limited operating history, no approved products, and has incurred significant net losses since inception, which are expected to continue[101](index=101&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Successful development is heavily dependent on key product candidates (latozinemab, AL002, AL101) and collaborations with GSK and AbbVie[101](index=101&type=chunk)[117](index=117&type=chunk) - The company will need substantial additional financing to complete development and commercialization, and failure to obtain it could force delays or termination of programs[101](index=101&type=chunk)[111](index=111&type=chunk) - Clinical trials may be delayed or fail due to issues with enrollment, adverse events (such as ARIA observed in the INVOKE-2 trial), or failure to demonstrate efficacy[103](index=103&type=chunk)[132](index=132&type=chunk) - The company relies on third-party CDMOs for manufacturing, which is complex and subject to rigorous regulatory standards and potential supply chain disruptions[142](index=142&type=chunk)[195](index=195&type=chunk) [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including an amendment to the AbbVie co-development agreement and certifications by the Principal Executive and Financial Officers - Key exhibits filed include Amendment Number One to the Co-Development and Option Agreement with AbbVie Biotechnology Ltd., effective February 13, 2023[277](index=277&type=chunk) - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906 are included[277](index=277&type=chunk)

Alector Corporate Overview Forward-Looking Statement This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this presentation are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will” or the negative o ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Alector is a clinical-stage biopharmaceutical company treating neurodegenerative diseases via immuno-neurology and strategic collaborations - Alector is a clinical-stage biopharmaceutical company pioneering immuno-neurology, a therapeutic approach targeting immune dysfunction as a root cause of neurodegenerative disorders[15](index=15&type=chunk) - The company has **three product candidates in clinical development**: latozinemab (AL001), AL002, and AL101, with a cash runway extended through 2025[15](index=15&type=chunk) - Alector has **significant strategic collaborations** with GlaxoSmithKline (GSK) for its progranulin programs and with AbbVie for its TREM2 program[15](index=15&type=chunk) [Pipeline Programs](index=11&type=section&id=Our%20Pipeline%20Programs) The company's clinical pipeline is led by its Progranulin (PGRN) and TREM2 programs for neurodegenerative and oncology indications Clinical Pipeline Status | Product Candidate | Target | Indication | Development Stage | | :--- | :--- | :--- | :--- | | **Latozinemab (AL001)** | Progranulin (PGRN) | FTD-GRN | Pivotal Phase 3 (INFRONT-3) | | **AL101** | Progranulin (PGRN) | Alzheimer's Disease (AD) | Phase 2 planned for 2023 | | **AL002** | TREM2 | Early Alzheimer's Disease | Phase 2 (INVOKE-2) | | **AL044** | MS4A | Alzheimer's Disease | Phase 1 trial closed; backup program active | | **AL009** | Multi-Siglec | Oncology | Preclinical | | **AL008** | SIRP-alpha | Oncology | Preclinical (IND submitted in China) | - In the ongoing INVOKE-2 Phase 2 trial for AL002 in Alzheimer's, **Amyloid Related Imaging Abnormalities (ARIA) were observed**, leading to the voluntary discontinuation of dosing for patients with the APOE e4/e4 genotype[18](index=18&type=chunk) - The Phase 1 trial for AL044 was closed based on initial data, and Alector is now **actively pursuing a backup MS4A program**[18](index=18&type=chunk)[90](index=90&type=chunk) [Strategic Alliances](index=26&type=section&id=Strategic%20Alliances) Alector advances its pipeline through key collaborations with GSK and AbbVie, involving significant upfront payments and milestone potential - Entered a collaboration with GSK in July 2021 for latozinemab and AL101, receiving **$700 million in upfront payments** and eligibility for up to **$1.5 billion in milestones**[98](index=98&type=chunk)[99](index=99&type=chunk) - Partnered with AbbVie in October 2017 to co-develop TREM2 programs, receiving **$225 million in upfront payments**, with AbbVie holding an exclusive option for global development[102](index=102&type=chunk) - Utilizes Adimab's antibody discovery and optimization platform for several product candidates, including latozinemab, AL101, and AL002[105](index=105&type=chunk) [Manufacturing, Commercialization, and IP](index=30&type=section&id=Manufacturing%2C%20Commercialization%2C%20and%20IP) The company relies on third-party CDMOs for manufacturing, lacks commercial infrastructure, and protects its assets with a multi-layered patent strategy - The company **lacks internal manufacturing infrastructure** and relies on third-party cGMP manufacturers (CDMOs) for production[112](index=112&type=chunk)[113](index=113&type=chunk) - Alector has **no existing sales, marketing, or distribution capabilities** and intends to leverage partnerships if its products are approved[115](index=115&type=chunk) Key Program Patent Expiration Outlook | Program | Number of Patent Families | Expected Expiration Range (excluding extensions) | | :--- | :--- | :--- | | **PGRN (latozinemab, AL101)** | 6 | 2036 - 2042 | | **TREM2 (AL002)** | 7 | 2035 - 2043 | | **MS4A** | 2 | 2039 - 2040 | [Government Regulation](index=32&type=section&id=Government%20Regulation) Operations are subject to extensive FDA and international regulation, with key programs holding Orphan Drug and Fast Track designations - Product candidates are regulated by the FDA and require a **Biologics License Application (BLA)** before marketing[125](index=125&type=chunk)[127](index=127&type=chunk) - Latozinemab and AL101 have received **Orphan Drug and Fast Track designations** for FTD to expedite development and review[40](index=40&type=chunk)[137](index=137&type=chunk)[140](index=140&type=chunk) - Sales will depend on third-party payor reimbursement and face pressure from healthcare reforms like the **Inflation Reduction Act of 2022**[160](index=160&type=chunk)[251](index=251&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, clinical, and operational risks due to its clinical-stage status and reliance on key collaborations - **Financial Risks**: The company has a history of **significant net losses ($133.3M in 2022)** and will require substantial additional financing[176](index=176&type=chunk)[177](index=177&type=chunk)[183](index=183&type=chunk) - **Clinical & Development Risks**: Drug development is highly uncertain, and candidates could show adverse side effects, such as the **ARIA observed in the AL002 trial**[172](index=172&type=chunk)[197](index=197&type=chunk)[206](index=206&type=chunk) - **Operational & Strategic Risks**: The company is **heavily dependent on its collaborations** with GSK and AbbVie and on third parties for manufacturing[215](index=215&type=chunk)[268](index=268&type=chunk)[276](index=276&type=chunk) [Properties](index=97&type=section&id=Item%202.%20Properties) Alector leases approximately 105,000 square feet for its headquarters in South San Francisco, with the lease expiring in May 2029 - The company's headquarters are located in South San Francisco, California, where it leases approximately **105,000 square feet** of office and lab space[362](index=362&type=chunk) - An additional **18,700 square feet** of office and lab space is leased in Newark, California[362](index=362&type=chunk) [Legal Proceedings](index=97&type=section&id=Item%203.%20Legal%20Proceedings) Alector is not a party to any litigation or legal proceedings expected to have a material adverse effect on its business - The company is **not currently a party to any material legal proceedings** that management believes would have a material adverse effect on the business[363](index=363&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=98&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Alector's common stock trades on Nasdaq under "ALEC," and the company has never paid cash dividends and does not plan to - The company's common stock is traded on the Nasdaq Global Select Market under the symbol **"ALEC"**[365](index=365&type=chunk) - Alector has **not paid any cash dividends** since its inception and does not plan to pay any in the foreseeable future[367](index=367&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=99&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported a net loss of $133.3 million in 2022, with cash reserves of $712.9 million expected to fund operations through 2025 [Results of Operations](index=104&type=section&id=Results%20of%20Operations) Net loss widened to $133.3 million in 2022 from $36.3 million in 2021, driven by lower revenue and higher R&D expenses Comparison of Financial Results (2022 vs. 2021) | Financial Metric | 2022 (in millions) | 2021 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $133.6 | $207.1 | $(73.5) | | Research & Development | $210.4 | $189.4 | $21.0 | | General & Administrative | $61.0 | $55.0 | $6.0 | | **Net Loss** | **$(133.3)** | **$(36.3)** | **$(97.0)** | - The decrease in 2022 collaboration revenue was primarily due to the recognition of **$173.4 million in license revenue from the GSK Agreement in 2021**[381](index=381&type=chunk) R&D Expenses by Program (2022 vs. 2021) | Program | 2022 (in millions) | 2021 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Latozinemab | $22.1 | $31.7 | $(9.6) | | AL101 | $7.8 | $6.7 | $1.1 | | AL002 | $34.8 | $25.9 | $8.9 | | AL044 | $7.5 | $9.9 | $(2.4) | | Other early stage | $37.4 | $37.7 | $(0.3) | | Personnel & Unallocated | $100.8 | $77.4 | $23.4 | [Liquidity and Capital Resources](index=105&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended 2022 with $712.9 million in cash, which is expected to be sufficient to fund operations and capital needs through 2025 - The company held **$712.9 million in cash, cash equivalents, and marketable securities** as of December 31, 2022[389](index=389&type=chunk) - Based on the current operating plan, existing cash is expected to **fund operations and capital requirements through 2025**[390](index=390&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Operating Activities** | $(20,329) | $298,551 | $(166,734) | | **Investing Activities** | $(159,014) | $(49,663) | $(105,051) | | **Financing Activities** | $4,514 | $30,295 | $232,113 | [Quantitative and Qualitative Disclosures About Market Risk](index=107&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its investment portfolio, while foreign currency risk is minimal - The company's main market risk is interest rate sensitivity on its **$712.9 million portfolio** of cash, cash equivalents, and marketable securities[409](index=409&type=chunk) - A hypothetical **100 basis point (1%) change in interest rates** would impact the fair value of the investment portfolio by approximately **$2.6 million**[409](index=409&type=chunk) - **Foreign currency risk is minimal** as most expenses are denominated in U.S. dollars[410](index=410&type=chunk) [Financial Statements and Supplementary Data](index=108&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements for 2022 show total assets of $787.6 million, a net loss of $133.3 million, and stockholders' equity of $214.4 million Key Balance Sheet Data (as of Dec 31, 2022) | Account | Amount (in thousands) | | :--- | :--- | | Cash, cash equivalents, and marketable securities | $712,851 | | Total Assets | $787,648 | | Deferred Revenue (Current & Long-term) | $491,601 | | Total Liabilities | $573,206 | | Total Stockholders' Equity | $214,442 | Key Income Statement Data (Year ended Dec 31, 2022) | Account | Amount (in thousands) | | :--- | :--- | | Collaboration Revenue | $133,617 | | Research and Development Expenses | $210,418 | | General and Administrative Expenses | $61,033 | | **Net Loss** | **$(133,310)** | [Controls and Procedures](index=130&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2022[500](index=500&type=chunk) - Management's assessment concluded that the company's **internal control over financial reporting was effective** as of December 31, 2022[502](index=502&type=chunk)[504](index=504&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=132&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - The required information for this item is **incorporated by reference** from the company's 2023 Proxy Statement[509](index=509&type=chunk) [Executive Compensation](index=132&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - The required information for this item is **incorporated by reference** from the company's 2023 Proxy Statement[510](index=510&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's 2023 Proxy Statement - The required information for this item is **incorporated by reference** from the company's 2023 Proxy Statement[511](index=511&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=132&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - The required information for this item is **incorporated by reference** from the company's 2023 Proxy Statement[512](index=512&type=chunk) [Principal Accounting Fees and Services](index=132&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2023 Proxy Statement - The required information for this item is **incorporated by reference** from the company's 2023 Proxy Statement[513](index=513&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=133&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K - This section contains the list of financial statements and exhibits filed with the Form 10-K[515](index=515&type=chunk)