Shares of Alector (NASDAQ:ALEC), Inc. ALEC surged 57.1% on Friday after the company announced that it has entered into a strategic collaboration with British pharma giant GlaxoSmithKline (NYSE:GSK) GSK to jointly develop and commercialize its two clinical-stage first-in-class monoclonal antibodies for treating neurodegenerative diseases.
The companies are looking to jointly develop and co-commercialize AL001 and AL101, which are designed to elevate levels of progranulin, a key regulator of immune activity in the brain with links to multiple neurodegenerative disorders.
In fact, Alector's has rallied 132.7% so far this year compared with the industry’s increase of 2.1%.
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With this deal, the companies are looking to leverage Alector’s expertise in immuno-neurology with Glaxo’s focus on immunology and human genetics, its drug development capabilities, as well as its global footprint.
Per the deal, Alector will receive an upfront payment of $700 million from Glaxo and will also be eligible to receive up to $1.5 billion in potential milestone payments, profit sharing and royalties on net sales if a product is commercialized from the above collaboration.
Alector will lead the development of AL001 and AL101 through phase II proof-of-concept, after which both companies will share development responsibilities and costs for the subsequent studies on AL001 and AL101.
Both Alector and Glaxo will co-commercialize and share profits in the United States, while Glaxo will solely retain commercialization rights for AL001 and AL101 in ex-U.S. markets.
The closure of the deal depends on customary closing conditions, including reviews by the regulatory agencies under the Hart-ScottRodino Act.
Please note that enrollment is currently ongoing in a phase III study which is evaluating AL001 in people at risk with frontotemporal dementia due to a progranulin gene mutation (FTD-GRN). The candidate is also being investigated in a phase II study for treating symptomatic FTD patients with a mutation in the C9orf72 gene. A phase II study on AL001 for treating amyotrophic lateral sclerosis or ALS is expected to begin in the second half of 2021.
AL101 is in early-stage development, and has been designed for treating more common neurodegenerative diseases like Parkinson’s disease and Alzheimer’s disease.
If successfully developed and upon potential approval, both AL001 and AL101 can lend a significant boost to the scientific community by providing a novel therapeutic approach for the treatment of neurodegenerative diseases. It will also help Glaxo to get access to a promising clinical program in immuno-neurology, thereby diversifying its product pipeline.
Zacks Rank & Stocks to Consider
Alector currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biotech sector are Repligen (NASDAQ:RGEN) Corporation RGEN and Trevena (NASDAQ:TRVN), Inc. TRVN, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Repligen’s earnings estimates have been revised 18.3% and 14.7% upward for 2021 and 2022, respectively, over the past 60 days. The stock has rallied 5.4% year to date.
Trevena’s loss per share estimates have narrowed 6.4% for 2021 and 3.7% for 2022 over the past 60 days.
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GlaxoSmithKline plc (GSK): Free Stock Analysis Report
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