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Brain drug developer Alector is laying off staff after one of its most advanced experimental medicines failed to show enough promise as a treatment for Alzheimer’s disease.
For the past few years, researchers have been testing the medicine, known as AL002, in a clinical trial that enrolled close to 400 participants with early-stage Alzheimer’s. Results were made public Monday afternoon, and while Alector found a few positive signs, its medicine didn’t hit any of the trial’s key goals and was not significantly better than a placebo at slowing disease.
The company’s share price subsequently fell almost 30% in after-hours trading, to just under $3.
To “align resources” with its “strategic priorities,” Alector will lay off about 41 of its 238 employees — a headcount reduction of roughly 17%. In an emailed statement, a company spokesperson said the reductions were across the organization.
As of Sept. 30, Alector had $457 million in cash, cash equivalents and investments, which the company estimates are enough resources to stay operational through 2026. Alector recorded a net loss of $42 million during the third quarter.
AL002 is an antibody drug designed to activate a protein found on the surface of certain cells made in the bone marrow. Studies suggests this “TREM2” protein performs a variety of important functions, with one being the promotion of immune cells that reside in the brain. Those cells, called microglia, are somewhat akin to controlled forest fires: they clear out toxic debris and help the brain grow and heal. Yet they can also overly inflame the nervous system, causing it to deteriorate.
Alector intends to keep exploring TREM2 biology, according to Chief Medical Officer Gary Romano. In the meantime, though, it has chosen to stop an extension study of AL002.
The spokesperson did not confirm whether AL002 development will halt altogether, but noted Alector plans to “thoroughly” explore the data from the failed trial before making before a decision about future TREM2 research. It also expects to share the full results from the trial at a medical meeting next year.
The company has been working on AL002 with AbbVie since the two entered a partnership in 2017. That deal gave Alector $205 million upfront, and the collaboration payments AbbVie has made since then represent a main source of revenue for Alector.