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 June 30, 2024 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 of in ...

Exhibit 99.1 Alector Reports Second Quarter 2024 Financial Results and Provides Business Update Data from INVOKE-2 Phase 2 clinical trial of AL002 in individuals with early Alzheimer's disease (AD) on track for Q4 2024 Patient baseline characteristics data for the INVOKE-2 trial confirm the intended study population for testing the effects of AL002, a novel TREM2 agonist, in early AD The latozinemab pivotal INFRONT-3 Phase 3 trial continues to progress well, supported by a recent U.S. Food and Drug Administ ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The company reported an improved net loss in Q1 2024, with strong cash reserves bolstered by a public offering and collaboration revenues [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects increased assets and stockholders' equity, driven by a public offering, while liabilities decreased due to reduced deferred revenue - In January 2024, the company completed a public offering, issuing 10,869,566 shares of common stock which resulted in net proceeds of **$71.1 million**, significantly bolstering **stockholders' equity**[25](index=25&type=chunk) Balance Sheet Summary (in thousands) | Balance Sheet Items | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash, cash equivalents, and marketable securities | $562,083 | $548,861 | | Total Assets | $635,494 | $621,827 | | Total Liabilities | $456,587 | $487,669 | | Total Stockholders' Equity | $178,907 | $134,158 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a reduced net loss in Q1 2024, primarily driven by a decrease in operating expenses, particularly research and development Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Collaboration Revenue | $15,893 | $16,549 | | Research and Development | $45,167 | $51,887 | | General and Administrative | $14,434 | $14,777 | | Loss from Operations | ($43,708) | ($50,115) | | Net Loss | ($36,079) | ($45,857) | | Net Loss Per Share | ($0.38) | ($0.55) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased in Q1 2024, offset by significant cash provided from financing activities, primarily a public stock offering - The **$71.1 million** in cash from financing activities was due to proceeds from the issuance of common stock in a public offering, net of issuance costs[22](index=22&type=chunk)[78](index=78&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($61,346) | ($48,548) | | Net cash (used in) provided by investing activities | ($11,765) | $88,701 | | Net cash provided by financing activities | $71,108 | $1,079 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail collaboration agreements with GSK and AbbVie as primary revenue sources, alongside stock-based compensation expenses for the quarter - Under the GSK Agreement, collaboration revenue was **$8.7 million** in Q1 2024, with a deferred revenue balance of **$238.7 million** as of March 31, 2024[43](index=43&type=chunk) - Under the AbbVie Agreement, collaboration revenue was **$7.2 million** in Q1 2024, with a deferred revenue balance of **$39.3 million** expected to be recognized through clinical trial completion for the AL002 program[44](index=44&type=chunk) Stock-Based Compensation (in thousands) | Expense Category | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Research and development | $5,395 | $5,655 | | General and administrative | $4,912 | $5,320 | | **Total** | **$10,307** | **$10,975** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's immuno-neurology focus, reduced net loss in Q1 2024 due to lower R&D, and sufficient cash to fund operations through 2026 [Overview](index=18&type=section&id=Overview) Alector, a clinical-stage biotech, focuses on immuno-neurology with lead candidates latozinemab, AL002, and AL101, and received FDA Breakthrough Therapy Designation for latozinemab - The company is focusing development resources on **latozinemab** for FTD and on **AL002** and **AL101** for Alzheimer's disease, in collaboration with **GSK** and **AbbVie**[52](index=52&type=chunk) - In February 2024, the FDA granted **Breakthrough Therapy Designation** to **latozinemab** for the treatment of **FTD-GRN**[52](index=52&type=chunk) - Data from the **INVOKE-2 Phase 2 clinical trial** for **AL002** in Alzheimer's disease is expected in the **fourth quarter of 2024**[53](index=53&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q1 2024 saw a slight decrease in collaboration revenue but a significant reduction in operating expenses, primarily R&D, leading to an improved loss from operations - The **$6.7 million decrease** in **R&D expenses** was primarily due to the company's **prioritization of selected late-stage programs** and a **decrease in personnel-related costs**[65](index=65&type=chunk) Comparison of Operations (in thousands) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $15,893 | $16,549 | ($656) | | R&D Expenses | $45,167 | $51,887 | ($6,720) | | G&A Expenses | $14,434 | $14,777 | ($343) | | Loss from Operations | ($43,708) | ($50,115) | $6,407 | | Net Loss | ($36,079) | ($45,857) | $9,778 | R&D Expense Breakdown (in thousands) | Program | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Latozinemab | $2,095 | $4,311 | ($2,216) | | AL101 | $938 | $1,772 | ($834) | | AL002 | $13,262 | $11,064 | $2,198 | | Other programs | $3,970 | $6,974 | ($3,004) | | Personnel related | $18,897 | $21,934 | ($3,037) | [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Alector held **$562.1 million** in cash as of March 31, 2024, projected to fund operations through 2026, though substantial additional funding will be required for future R&D - As of March 31, 2024, the company had **$562.1 million** in cash, cash equivalents, and marketable securities[70](index=70&type=chunk) - The company anticipates its existing cash will fund operations and capital expenditure requirements **through 2026**[71](index=71&type=chunk) - Cash used in operating activities was **$61.3 million** in Q1 2024, primarily due to the net loss of **$36.1 million** and changes in working capital, including a **$15.9 million decrease** in deferred revenue[75](index=75&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency fluctuations, with a **100 basis point** interest rate change impacting investments by **$2.9 million** - The company's primary market risks are **interest rate sensitivities** and **foreign currency risk**[81](index=81&type=chunk)[84](index=84&type=chunk) - As of March 31, 2024, an immediate **100 basis point** increase or decrease in interest rates would cause a change in the fair value of the company's investments of approximately **$2.9 million**[83](index=83&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were **effective**[85](index=85&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have **materially affected**, or are reasonably likely to materially affect, internal controls[86](index=86&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=29&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 involved** in any litigation or legal proceedings expected to have a **material adverse effect** on the business[87](index=87&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a history of net losses, high drug development uncertainty, reliance on collaborators, and the need for substantial additional financing - The company has a history of **significant net losses** (**$746.2 million accumulated deficit** as of March 31, 2024) and expects to continue incurring losses for the foreseeable future[88](index=88&type=chunk)[91](index=91&type=chunk) - The business is **heavily dependent** on the **successful development** of its clinical-stage product candidates (latozinemab, AL002, AL101), which is an **inherently risky and uncertain process**[88](index=88&type=chunk)[100](index=100&type=chunk) - The company will need **substantial additional financing** to complete development and commercialization, and failure to obtain capital could force **delays or termination of programs**[88](index=88&type=chunk)[97](index=97&type=chunk) - Clinical trials may reveal **significant adverse events**; for example, treatment-emergent MRI findings resembling **Amyloid-Related Imaging Abnormalities (ARIA)** have been observed in the INVOKE-2 Phase 2 trial of AL002, which could **delay or prevent regulatory approval**[89](index=89&type=chunk)[110](index=110&type=chunk)[130](index=130&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - None reported[219](index=219&type=chunk) [Other Information](index=83&type=section&id=Item%205.%20Other%20Information) No other material information was reported, including no changes to Rule 10b5-1 trading arrangements by directors or officers - **No director or officer** adopted or terminated a **Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the last fiscal quarter[219](index=219&type=chunk) [Exhibits](index=83&type=section&id=Item%206.%20Exhibits) The filing includes key exhibits such as an amended collaboration agreement with Glaxo Wellcome UK Ltd., and the Outside Director Compensation Policy - A **letter agreement amending the 2021 Collaboration and License Agreement** with **Glaxo Wellcome UK Ltd.** was filed as an exhibit[220](index=220&type=chunk) - The company's **Outside Director Compensation Policy** was filed as an exhibit[220](index=220&type=chunk)

Exhibit 99.1 Alector Reports First Quarter 2024 Financial Results and Provides Business Update Data from INVOKE-2, evaluating the most advanced TREM2 candidate in clinical development for early Alzheimer’s disease, on track for Q4 2024 Strengthened leadership team with key appointments: Neil Berkley, M.S., M.B.A., named Chief Business Officer; Errol De Souza, Ph.D., and Mark Altmeyer, M.B.A., join Board of Directors $562.1 million in cash, cash equivalents and investments provide runway through 2026 South S ...

Alector, Inc. (NASDAQ:ALEC) Q4 2023 Earnings Conference Call February 27, 2024 4:30 PM ET Company Participants Katie Hogan - Investor Relations Arnon Rosenthal - Co-Founder and Chief Executive Officer Sara Kenkare-Mitra - President and Head, Research and Development Gary Romano - Chief Medical Officer Marc Grasso - Chief Financial Officer Conference Call Participants Michael Reid - Morgan Stanley Pete Stavropoulos - Cantor Fitzgerald Greg Harrison - Bank of America Myles Minter - William Blair Ananda Ghosh ...

Exhibit 99.1 Alector Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Business Update Data from INVOKE-2, evaluating the most advanced TREM2 candidate in clinical development for early Alzheimer’s disease (AD), expected in Q4 2024; trial enrollment completed in Q3 2023 First participant in the global PROGRESS-AD Phase 2 clinical trial of AL101 in early AD dosed in Q1 2024 Latozinemab granted FDA’s Breakthrough Therapy Designation for frontotemporal dementia due to a mutation in the p ...

Financial Performance - The company incurred net losses of $130.4 million, $133.3 million, and $36.3 million for the years ended December 31, 2023, 2022, and 2021, respectively, with an accumulated deficit of $710.1 million as of December 31, 2023[141]. - The company has no products approved for commercial sale and has not generated any revenue from product sales to date[140]. - The company expects to continue incurring significant expenses and higher operating losses for the foreseeable future due to ongoing research and development activities[142]. - The company anticipates needing substantial additional financing to complete the development and commercialization of its product candidates[144]. - The company has federal net operating loss (NOL) carryforwards of approximately zero and state NOL carryforwards of $202.2 million as of December 31, 2023[250]. - Federal NOL carryforwards have an indefinite life but can offset no more than 80% of taxable income[250]. - The market price of the company's common stock has demonstrated volatility, influenced by various factors including clinical trial results and competitive products[252]. - The company incurred significant additional costs as a public company, including legal and accounting expenses, which are expected to increase due to compliance with regulations[259]. Research and Development - The company is in Phase 2 and Phase 3 clinical trials for product candidate latozinemab and is also conducting Phase 2 trials for AL002 and AL101[140]. - The company plans to develop AL101 for larger indications, including Alzheimer's disease and Parkinson's disease, after inactivating the IND for FTD[140]. - The company has concentrated research efforts on neurodegenerative diseases, which have seen limited success in drug development[138]. - The company has identified over 100 potential immune system targets, with three product candidates (latozinemab, AL002, and AL101) currently in clinical development[145]. - The company has never completed a clinical development program and has not submitted any applications for regulatory approval for its product candidates[148]. - The company’s drug development strategy includes seeking regulatory approval in indications with the most evidence for quick proof-of-concept data[150]. - The company may abandon development efforts if clinical trials do not yield positive results, adversely affecting its business[148]. - Enrollment in Phase 3 INFRONT-3 and Phase 2 INVOKE-2 trials was completed in the second half of 2023[155]. - The company faced challenges in patient enrollment due to factors such as eligibility criteria and competing clinical trials[156]. - The company has observed treatment-emergent MRI findings resembling ARIA in the INVOKE-2 trial, leading to a voluntary discontinuation of dosing for certain participants[158]. - The company continues to implement earlier MRI monitoring and follow guidelines for ARIA management in clinical trials[158]. - The results of clinical trials may not be predictive of regulatory approval, and additional trials may be required[157]. - The manufacturing process for product candidates is complex, expensive, and highly regulated, posing risks that could delay clinical trials or commercial launches[163]. Regulatory and Compliance Risks - The regulatory approval processes for product candidates are lengthy and unpredictable, potentially taking many years and significantly harming the business if approvals are not obtained[175]. - The company has not submitted any applications for regulatory approval for its product candidates, and there is a risk that none will ever receive approval[175]. - Adverse events or undesirable side effects from product candidates could lead to interruptions in clinical trials and regulatory approval delays, impacting commercial potential[177]. - Regulatory authorities may require additional studies or impose new regulations that could delay approvals and increase compliance costs[176]. - The company may conduct clinical trials outside the United States, but there is no guarantee that data from these trials will be accepted by regulatory authorities[179]. - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, and failures in one area could negatively impact approvals elsewhere[181]. - The company may need to develop companion diagnostics for its product candidates, which could introduce additional regulatory requirements[179]. - The company has received orphan drug designation from the FDA for latozinemab for the treatment of FTD, which may provide market exclusivity benefits[185]. - The company obtained Fast Track designation and Breakthrough Therapy designation from the FDA for latozinemab, facilitating expedited development and review[186]. - The company inactivated the AL101 IND for FTD in Q3 2023, resulting in the loss of Fast Track designation for that product[187]. - Legislative measures, such as the Inflation Reduction Act, may significantly impact the pharmaceutical industry, including potential price negotiations and increased rebate obligations[188]. - The elimination of the statutory cap on Medicaid Drug Rebate Program rebates effective January 1, 2024, may require manufacturers to pay more in rebates than they receive from sales[188]. - Regulatory compliance costs and potential sanctions could adversely affect the company's ability to commercialize products and generate revenue[184]. - The company is subject to ongoing regulatory requirements that may impact its operational results and market value[184]. - Future healthcare reforms may lead to reduced Medicare funding and lower reimbursement rates, impacting revenue[189]. - Increased scrutiny by Congress on the FDA's approval process may delay marketing approvals and impose stricter requirements[190]. - Compliance with healthcare laws is critical, as violations could lead to significant penalties and operational impacts[192]. - The company faces risks related to fraud and misconduct by employees and contractors, which could lead to regulatory scrutiny[191]. - Environmental, health, and safety compliance is essential, as non-compliance could result in substantial fines and operational disruptions[195]. - Evolving data protection laws, such as GDPR, require ongoing compliance efforts, with potential penalties for violations[196]. - The company anticipates increased costs associated with compliance to healthcare and environmental regulations[194]. Competition and Market Dynamics - The neurodegenerative disease market is highly competitive, with significant resources concentrated among major pharmaceutical companies[161]. - The company may face substantial delays in clinical trials and is highly dependent on key personnel for successful implementation of its business strategy[139]. - The company may face litigation regarding the scope and validity of its patents in relation to competitors' products[162]. - The company may face significant competition in seeking appropriate collaborations, which could delay or reduce the scope of development programs[204]. - The company may face potential competition from biosimilars, which could arise sooner than anticipated due to regulatory pathways established by the FDA and European Commission[170]. - Market acceptance by physicians, patients, and payors is essential for commercial success, influenced by factors such as efficacy, safety, and pricing[166]. - Regulatory approval processes for pricing and reimbursement vary by country, potentially delaying product launches and impacting revenue[168]. - Reimbursement for newly approved drugs may be limited, affecting the company's ability to cover costs and achieve profitability[169]. - Future CMS coverage decisions could materially affect the ability to commercialize product candidates and achieve profitability[189]. Intellectual Property and Legal Risks - The company’s ability to obtain and maintain patent protection is critical for its product candidates, and failure to do so could adversely affect commercialization efforts[210]. - The patent prosecution process is complex and costly, and there is no guarantee that pending patent applications will result in enforceable patents[212]. - The company may face challenges in enforcing patent rights, especially if patents are co-owned with third parties, which could allow competitors to market similar products[215]. - The expiration of patents before product commercialization could limit the company's ability to exclude competitors from the market[214]. - The company may be subject to claims challenging the inventorship of its patents, which could result in substantial costs and loss of valuable intellectual property rights[229]. - The company relies on trade secrets and confidentiality agreements to protect proprietary information, but breaches could materially harm its competitive position[230]. - The competitive landscape in neurodegeneration therapy may lead to significant intellectual property litigation, impacting the company's ability to commercialize its product candidates[234]. - The company may face third-party claims of patent infringement, which could delay or prevent the commercialization of its technologies[235]. - Engaging in patent litigation could divert management resources and significantly harm the company's business due to high costs and potential damages[235]. - The company may struggle to obtain necessary rights to product candidates or technologies due to competition for third-party intellectual property licenses[232]. - Claims of wrongful use or disclosure of trade secrets by employees or consultants could lead to litigation and substantial costs[233]. Operational and Strategic Risks - The company relies on collaborations with third parties for research, development, and commercialization, which poses risks if these collaborations are not successful[202]. - AbbVie can terminate its collaboration agreement for convenience at any time, which could impact the development of product candidates[202]. - GSK is conducting a Phase 2 trial with costs up to $140.5 million, which are not under the company's control[202]. - Reliance on third parties for clinical trials and research may lead to delays if these parties do not meet their contractual obligations[206]. - The company remains responsible for ensuring compliance with regulatory requirements, which could result in fines or sanctions if not adhered to[206]. - Any performance failure by distributors could delay clinical development or marketing approval, resulting in potential revenue loss[206]. - The company relies on third-party contract development and manufacturing organizations (CDMOs) for the manufacture of materials for preclinical studies, clinical trials, and commercial supply, which increases operational risks[207]. - The company does not have its own manufacturing facilities and is dependent on CDMOs, which may lead to delays or impairments in development and commercialization efforts if any CDMO fails to perform as agreed[207]. - The company faces risks related to the supply of key raw materials from third-party suppliers, which could be affected by global economic conditions, trade tariffs, and geopolitical events[208]. - The company does not have long-term supply agreements and purchases raw materials on a development manufacturing services agreement or purchase order basis, limiting negotiation leverage[209]. - The company is highly dependent on key personnel, including its CEO, and may face challenges in attracting and retaining qualified employees[240]. - The company initiated a reduction in force impacting approximately 30 employees in March 2023, incurring one-time restructuring charges of approximately $1.7 million[241]. - The company has engaged in strategic collaborations with AbbVie and GSK, which may lead to increased operating expenses and cash requirements[243]. - Future acquisitions or collaborations may result in dilution of stockholders and potential goodwill impairment[243]. - The company relies on independent organizations and consultants for certain services, and any inability to manage these relationships could delay clinical trials[242]. Cybersecurity and Business Continuity - The company faces risks from cyberattacks that could disrupt operations and compromise sensitive data, with increasing frequency and sophistication of such attacks[244]. - Business disruptions from global pandemics and other uncontrollable events could significantly harm future revenue and financial condition[246]. - The company maintains property damage and business interruption insurance, but coverage may not be sufficient to cover all losses[247]. - The company’s ability to recover from cyber incidents may be limited, potentially resulting in financial, legal, and reputational harm[245]. Market and Economic Conditions - The company may experience adverse effects from international operations due to economic weakness, political instability, and regulatory challenges[248]. - Changes in tax laws, including the Inflation Reduction Act, could negatively impact financial position and cash flows[251]. - The annual consumer price index increase for the U.S. was approximately 3.4% for the 12 months ended December 31, 2023, impacting the company's operating expenses[262]. - Sales of substantial amounts of common stock could lead to a significant decline in market price, even if the business performs well[255]. - Future government shutdowns could impact the company's ability to access public markets and obtain necessary capital[198]. - The average review times at the FDA have fluctuated due to various factors, which could adversely affect the company's ability to bring new drugs to market[198].

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].