Global healthcare firm GlaxoSmithKline (GSK) and San Francisco-based biotechnology company Alector Inc. (ALEC) have signed a global agreement to develop and sell two clinical-stage monoclonal antibodies (AL001 and AL101) for neurodegenerative diseases.
Alector’s shares surged 57.1% and closed at $35.21 on Friday. (See Alector stock chart on TipRanks)
As per the terms of the agreement, Glaxo will make upfront payments of $700 million to Alector. Also, Alector will be eligible to receive up to an additional $1.5 billion in clinical development, regulatory, and commercial launch-related milestone payments.
Furthermore, Alector will be responsible for the development of AL101 and AL001 until Phase 2, after which both companies will carry out the late-stage studies. They will also divide the global development costs of both candidates.
AL001 is currently in Phase 3 study for patients with frontotemporal dementia due to a progranulin gene mutation (FTD-GRN). A Phase 2 trial is also currently underway in symptomatic FTD patients with a mutation in the C9orf72 gene.
Additionally, AL101 is in Phase 1a study among patients suffering from neurodegenerative diseases like Parkinson’s and Alzheimer’s.
CEO of Alector Arnon Rosenthal said, “This transformative collaboration brings together Alector’s leading immuno-neurology expertise with GSK’s commitment to immunology and human genetics, proven drug development capabilities and global footprint, to help expand and accelerate the development of our progranulin franchise into large indications while bolstering the build out of our own late-stage development and commercial capabilities.”
Goldman Sachs analyst Graig Suvannavejh recently maintained a Buy rating on Alector with a price target of $29 (17.6% downside potential). The analyst is of the view that the partnership with Glaxo could mean that AL001’s Phase 2 results will be positive.
Overall, the stock has a Strong Buy consensus rating based on 4 Buys. The average Alector price target of $32.75 implies 7% downside potential. The company’s shares have gained 80.4% over the past year.
According to TipRanks’ Smart Score rating system, Alector scores an 8 out of 10, suggesting that the stock is likely to outperform market averages.
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