Good afternoon and welcome to day two of the Barclays Global Healthcare Conference. My name is Carter Gould, covering U.S. biopharma. Pleased to welcome Alector to the stage, joining us, co-founder and chief executive officer Dr. Arnon Rosenthal, and Marc Grasso, CFO. Alector has really been sort of in execution mode the past 12 not that they're not in execution mode now, but you're going to have some data at the end of this year and even more data next year. So it's a great opportunity to talk to the company ahead of those data sets. Maybe before we get started, I don't know if Marc or Arnon want to make some opening comments. Yes, go ahead. Yes, so basically we are an neurode generation company, whereas everyone else in the field, or most people in the field, are focusing on countering misfolded proteins like Aβ and tau in Alzheimer's disease, alpha-synuclein in Parkinson's disease. We in fact recruit the brain immune system to counteract multiple disease pathologies. So conceptually what we do is similar to immuno-oncology. What revolutionized cancer treatment in the last decade is that instead of killing cancer directly with chemotherapy, radiation, or toxin conjugated antibodies, we now recruit the immune system with CAR-T or with immune checkpoint molecules to go after the cancer. And this is the first time that you see actual cures in cancer. We are doing the same thing but targeting the brain-specific immune system to counteract multiple disease pathologies in dementia and other types of neurodegenerative diseases. We have an advantage over cancer because for neurodegeneration, primarily for Alzheimer's disease, there is very strong human genetics that tells you which are the checkpoint molecules on the brain-specific immune system that are worth targeting. With this approach, we now have three clinical programs, 2 Phase II programs in Alzheimer's disease, and a Phase III program in frontotemporal dementia that hopefully we will talk about. Absolutely. So I was going back to the Alector story. The past couple of weeks, and I went back to kind of what you guys came public with, and I thought it'd be a good opportunity to open up the conversation here with beyond sort of what's happened with your FTD data and some of the initial kind of reads on the TREM2 side. Maybe just take a step back and you say with your approach on targeting microglia, kind of how that has evolved when you think about the surrounding academic literature and additional data that's come out. I mean, when you guys came public, you had some genetic data, you had some preclinical data. But when you think about the rest of the field and how that's evolved since that time to support your approach, maybe you could speak to that, Arnon. Yeah, absolutely. So when we started the company almost 10 years ago, the immune system was not considered a major player in neurodegeneration. And if anything, the idea was that in Alzheimer's disease and multiple other neurodegenerative disorders, the immune system may be detrimental. That hyperactivity of the immune system may cause the disease and that you have to suppress the immune system as a therapeutic strategy. Since then, there was a wealth of information, human genetic information, and biology information that suggested the exact opposite. Meaning when we started, there were around 20 risk genes identified for Alzheimer's disease. Now there are over 70 risk genes. And the surprising finding from the genetic is that the majority of the risk genes are actually immune checkpoints for the brain-specific immune system. The other surprising finding was that the genetic mutations that increase the risk for Alzheimer's disease are largely mutations that suppress the immune system. So the genetic tells us that the immune system plays a key role in neurodegeneration, again, primarily in Alzheimer's disease, but also in other disorders, and that insufficient activity of the immune system causes the disease. So that if the immune system failed to surveil the brain, you develop the disease. And again, in this context, it's very similar to cancer. We develop new cancer cells every day, every minute, and a strong immune system eliminates the cancer cells immediately. Only if the cancer cells evade immune surveillance and response, you develop clinical cancer. And we think that the same thing happened in neurodegeneration. You get emerging pathologies, misfolded proteins, damaged connections between nerve cells, damaged myelin, leaky blood vessels constantly. The immune system normally repairs these pathologies and avoids the disease. But if the immune system fails to do that because of genetic mutations or normal aging, sort of it allows the disease to develop. I think when we started, the immune system was an esoteric component of the disease. I think now it's becoming mainstream. If you see the recent AD/PD meeting, there are multiple sessions on microglia, the central role of microglia in Alzheimer's disease, the role of microglia in removing beta amyloid, the role of microglia in basically maintaining brain health in general. I think it sort of since we started the company, something that was esoteric and unbelievable is now really mainstream and very hot topic in Alzheimer's therapeutics. Okay. We're going to come back to Alzheimer's, but let's focus on FTD for a minute. You had actually a very active 2023, though it was less about data and it was more about changes to the trial and some negotiations with the Phase I. Maybe walk through some of those nuances. Specifically, as we think about how that maybe either change, I mean, I think there's an appreciation that it changed the timelines, but when we think about also maximizing the opportunity of the probability of success here. Yeah, maybe I can take that one. Thanks, Carter. So with latozinemab and FTD-GRN, we did make some significant progress over the course of the last 12 months. A few things I'd highlight. First, most recently, we received breakthrough designation for the program, which we're excited about. We intend to continue to engage as closely as we can with the regulatory agencies and the Phase I. Also, later last year, we completed enrollment for the Phase III, and it was ahead of the target that we had set. And as you mentioned, we engaged with the agencies mid-last year around our plan for the study and specifically the plan to focus on the symptomatic patient population for the primary analysis. What we're able to do, both in the context of additional data from the longitudinal cohorts that are being followed in the space, both GENFI and ALLFTD, as well as a blinded sample size analysis of our own data, we're able to see that the variability within the symptomatic patients is reasonably predictable. We could appropriately power our study for 90-100 symptomatic patients for the primary endpoint. We ended up coming in ahead of that, 103 symptomatic patients. We think we're well powered at that level. It's improved actually relative to when we started the study. Initially, when we had started the study, we anticipated that we were powered to detect a 40% change in disease progression over the time frame of the study. Now we believe that we can actually detect as low as a mid-20s slowing of disease progression over the 96 weeks. When we think about those changes, what does that mean for potential labels given the focus on the symptomatic patients? FDA indicate anything on that front that we should be aware of? Well, I think the first point is we are going for complete approval with this approach. And we do anticipate that the symptomatic patients, which are the patients with the most unmet need, would be the first approval. We do see an opportunity to broaden that. And we think we want to we do want to address the presymptomatic patients as well. And we have presymptomatic patients in this study. And depending on how the data come out, we plan to go to the FDA with the totality of the data we have and to get as broad a label as possible. Okay. And when we think about going back to the Phase II, it is the data we have. We interrogated a lot. When you think back to that synthetic control arm and just maybe how the conversations around that being representative has kind of evolved over the past year and maybe, again, take something that gives you confidence that the Phase III is going to play out the way you expect given the strength of the signal coming out of the Phase II. Yes, I mean, we are as confident with the analysis of the Phase II as one can be with historical control. Means with the open label Phase II, again, we were able to show complete normalization of progranulin processing throughout the one-year trial period, normalizations of multiple biomarkers, including GFAP, multiple lysosomal enzymes, multiple inflammatory biomarkers, apparent slowdown in brain tissue loss with volumetric MRI, and approximately 50% slowdown in cognitive decline over a 12-month period, which is, in our view, very profound. And yeah, there's been criticism that it's an open label study with sort of historical control. I mean, the historical control patients, actually many of them became part of our Phase III trial. It's the exact same population. As Marc mentioned, we received breakthrough therapy based on this Phase II data, which the FDA reviewed critically and accepted as a basis for breakthrough therapy, which is a fairly rare event, especially for neurodegeneration. So again, we are confident in the data. The FDA was confident enough in the data to allocate us, give us breakthrough therapy. And we think that hopefully the data will reproduce in a placebo-controlled double-blind Phase III trial. Okay. So with the pivotal set to read out later next year, when we think about sort of in the meanwhile, are there any additional data cuts from the Phase II we should keep in mind or any other data flow in this program in the near term that we should? Thanks, Arnon. Yeah, I think right now the focus is really on delivering the phase three. That's the main focus for the team. We are continuing to offer drugs to the patients that are on the Phase II. Some of those have now gone on to the extension study. And we think that's encouraging. But right now the focus is really on the Phase III. Okay. Perfect. Well, why don't we transition to TREM2? Expect to see data on this program later this year. At this point, kind of how are you framing expectations for folks? You guys have talked around the need to consider this differently than the amyloid betas on a number of different axes. But again, as you make that conversation with investors, at this point, how are you framing that conversation? So first, yeah, it is a placebo-controlled double-blind Phase II study. We recruited 381 patients, 4 dose arms, 3 doses, and 1 placebo. And we have a comprehensive set of measurements. We are measuring five different cognitive readouts, both cognition and activity of daily living. CDR-SB, the gold standard for Alzheimer's disease, is our primary readout. We have PET imaging for both Aβ and tau, MRI imaging for brain volume and incidences of ARIA, CSF, and serum biomarkers. Again, Aβ 40, 42, multiple types of tau, GFAP, neurofilament, and multiple other targets. And we think that the totality of the data should tell us pretty conclusively if we have an effective drug. Because of the broad mechanism of the drug, again, activating the immune system that is the garbage collector for all misfolded proteins, not just Aβ, immune system that facilitates the replacement of damaged synaptic connections, damaged myelin, induce the functionality of the other support cells in the brain. Because of the broad mechanism, we ultimately expect the drug to be clinically better than Aβ. We expect it to have longer sort of durability, and we have it to possibly be effective both at early and late stage of Alzheimer's disease. So the way we phrase it, again, we are looking at the totality of the data. We want to see the minimum positive trend in cognition and in biomarkers, Aβ or tau, and possibly additional biomarkers. And we think that this would justify continuation of the program. On some of those biomarkers, let's focus on amyloid beta because it's the one I think people have the most kind of familiarity with. Again, you have a broad mechanism here. So on some level, you should be able to potentially show an impact across a number of these markers. At the same time, rightly or wrongly, people are going to benchmark you against what the amyloid beta-directed antibodies have shown, at least on that specific biomarker. I mean, on some level, you're doing the experiment. But again, how are you sort of level-setting expectations specifically on this marker? Yes, we think that sort of it's wrong to benchmark this drug based on Aβ because it has broader mechanisms. It means it could have a profound effect on tau. And again, ultimately, we would want to see better clinical effect. And that's really the ultimate judge of any drug. What we see, as you know, are incidences of ARIA-like events in our Phase II. As you know, ARIA are amyloid-related imaging abnormalities that were detected with MRI. And so far, with multiple anti-Aβ antibodies, ARIA was associated with extensive removal of Aβ and with clinical benefit. We see ARIA-like events which are indistinguishable from the ARIA observed by anti-amyloid beta antibodies, like the appearance on MRI, the timing of appearance, which is early after just one or two injections, the reversibility, the fact that patients invariably recover from the ARIA, the dependency on the APOE4 allele copy number, all sort of are completely indistinguishable. Sort of, again, the ARIA that we see is completely indistinguishable from the ARIA that was observed with anti-amyloid beta antibodies. So the simplest explanation is that we may be again, that we see an active drug and that we may be seeing even some efficacy related to amyloid beta. But we don't think that our drug is dependent on extensive removal of amyloid beta for efficacy. And again, because the mechanism is way beyond amyloid beta. And this is very different than anti-amyloid beta antibodies. The only thing that they can do is removing Aβ. There is a complete dependency between extensive removal of Aβ and modest efficacy. Here, we don't think that this link is necessary. When that first came out, was that surprising to you? Was it more confirmatory and you sort of expected something along those lines? Maybe you did it as maybe a risk too, but just yeah. No, it was confirmatory to us because we know that sort of the microglia is the garbage collector. This is the cell entity that contains and eventually removes amyloid beta. We saw both in animal models and in humans that if you don't have TREM2, the amyloid beta plaques are much larger. They are less compact. They are much more injurious to the surrounding nerve cells. There is, again, recent talk at the AD/PD showing direct convergence between TREM2 and amyloid beta removal. Means it was worked by Christian Haass in animal models, showing that if you don't have amyloid beta or if you have one of the genetic mutations that increase risk for Alzheimer's disease and you inject amyloid beta peptides, the spreading and damage that the amyloid beta is significantly larger. When you inject anti-A beta antibody, I think he used gantenerumab, if you don't have TREM2, again, the ability of this antibody to remove A beta plaques is significantly reduced. There is really sort of very strong convergence between microglia, TREM2 activity, and A beta. We may see effect on A beta. But again, we don't think that complete removal of A beta will be needed to see clinical efficacy. Right. You talked about in that patient population sort of the potential to work more broadly. Do you feel like the study is large enough and has enough representation across the different stages or severity of disease to potentially inform the optimal population to then advance in a Phase III? We are focusing initially on early-stage Alzheimer's disease. The patient population is a mild cognitive impairment to early AD. We think that it's a modest-sized trial, but we think that it's large enough to show effects, especially because of the trial design. It's a common close trial design. We are looking at patients at three time points, 96 weeks, 72 weeks, and 48 weeks. We will have data from three time points. We are looking at clinical measurements every six months. We'll have multiple readouts. These patients, once they complete two years, are voluntarily moving to long-term extension for another year. We could have data for up to three years reasonably soon. So we think that the overall duration of the trial, the fact that we have repeated measurements, not just baseline and one time point, increases the power and will enable us to see clear trends. And just sort of one thing to mention, so far, 95% of the patients that completed two years elected to switch to move to continue with the long-term extension. And sort of that's encouraging that, again, there are no adverse effects that prevent people from continuing and that people consider sort of worthwhile consider the drug worthwhile continuing on to. I should probably know the comparable benchmark from our friends at Biogen and Lilly, but maybe just put that in the context of what we saw with the. Yeah, I think it's lower than that. There is still, I think, high participation. But that's a good question. I don't know the number. So Marc, clearly the program at this stage is partnered with AbbVie. At this point, how should investors expect those results to be communicated? AbbVie is a large company. It's clearly more material to you. But I mean, it could be pretty transformative for AbbVie too. So how should the street expect the data to be communicated? Yeah, thanks, Carter. So first to note, it's an option deal with AbbVie. And they've paid us to this point substantially to fund the development of the program, including $220 million upfront, both $20 million cash, $20 million equity, and then additional milestones along the way, both from the standpoint of the commencement of the extension study Arnon mentioned, as well as support for additional patients in the Phase II. So we've seen good support from AbbVie along the way, which is great. It is an option deal, as I noted. So there will be a decision after the completion of the Phase II whether they choose to opt in. If they choose to opt in, there'll be a $250 million payment at that time. And we're anticipating, to your question, releasing the data end of this year. We think that it will be in the format of a top-line plus release. We want to have a fulsome data package both for investors and also for AbbVie from the standpoint of clarity around the clinical progression, clarity around the results for the key biomarkers, clarity around the results for imaging. We would anticipate that that would be in the format of a press release later this year. All right. Perfect. So we have a minute and a half. I wanted to ask Arnon one last question. And that is, so you have more insight into your trials, platforms, and the underlying science than we, the street, or investors do. So what are we missing? What's going better than expected? Is it FTD post-trial changes? You have more confidence there? Is it the broader platform? What's the biggest disconnect with the street in your mind? I think people are sort of averse to novelty still. Means that they don't distinguish maybe enough between the mechanism of action of our drug and anti-amyloid beta drug, the potential for a much more profound clinical benefit. And it's a completely novel mechanism. Nobody believes in immuno-oncology until there are clear sort of transformative data. Means people, in a way, justifiably are conservative. They don't want to switch to new things unless they are completely validated. But we think that the human genetics for our approach is very strong, stronger than any other sort of approach. We think that, again, our initial data in sort of our open-label Phase II, our progranulin-elevating drug, our Phase I with the TREM2 drug showed target engagement, the right PK, very good safety, and the ARIA suggested activity and possibly even efficacy. So I think people will come on board. mean, again, it took probably nine years to convert the immuno-neurology hypothesis from esoteric thing that everyone thought we are crazy doing it to a mainstream. Now it's really a mainstream. We get incredible interest now in what we do. So I think it's a matter of, in my view, a fairly short time before people will get on board and see that that could be the next big thing in all the generations. All right. Perfect. Well, we're going to have to leave it there. But data later this year is going to kick off a potentially transformative period for the company. Thank you again, Marc. Thank you. Thank you, Carter.