Alector stock rating downgraded to Neutral from Buy by BTIG

Investing.com - BTIG has downgraded Alector Inc. (NASDAQ:ALEC) from Buy to Neutral, citing the lack of treatment effect in the company’s INFRONT-3 trial for PGRN-FTD patients. The company, currently valued at $325 million, has seen its stock rise over 60% year-to-date despite operational challenges, according to InvestingPro data.

The research firm noted that the trial results appear to confirm the long-term bear case that increased PGRN outside cells does not result in sufficient PGRN in the lysosome to complement the natural deficiency of PGRN-FTD patients. This outcome suggests that PGRN transport may be very inefficient. InvestingPro analysis indicates the company is quickly burning through cash, with analysts anticipating a sales decline in the current year.

BTIG expressed concerns about Alector’s ongoing PROGRESS-AD trial, which tests a similar approach in Alzheimer’s disease patients, stating that this second trial now carries additional translational biology risk following the negative PGRN-FTD results.

The firm acknowledged that Alector remains a well-financed company in the blood-brain barrier shuttle space with an experienced team that conducts definitive trials. BTIG also noted the company’s recent Alector Brain Carrier investor event was thoughtful and data-rich.

Despite these strengths, BTIG moved to a Neutral rating, citing a crowded field and uncertainty about the ideal target product profile for most shuttled replacement payloads, including antibody-plaque binding monoclonal antibodies.

In other recent news, Alector Inc. faced significant challenges following the failure of its Phase III INFRONT-3 trial for the treatment of frontotemporal dementia with progranulin mutations (FTD-GRN). The trial, which focused on the company’s latozinemab treatment, did not meet its primary endpoints, leading to the discontinuation of the program. As a result, several analyst firms have downgraded Alector’s stock. William Blair downgraded the stock from Outperform to Market Perform, while Mizuho reduced its rating from Outperform to Neutral and lowered its price target from $3.50 to $1.50. TD Cowen also downgraded the stock from Buy to Hold, and Cantor Fitzgerald shifted its rating from Overweight to Neutral. The trial’s failure was attributed to its inability to demonstrate efficacy in slowing disease progression, despite showing a statistically significant effect on plasma progranulin concentrations. These developments have prompted a reevaluation of Alector’s future prospects by the investment community.

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