Shares in Alector (NASDAQ:ALEC) are tumbling 28.7% at 12:30 p.m. EDT on Wednesday over concerns COVID-19 could negatively impact patient enrollment and monitoring in clinical-stage trials of AL001.
The biotech company's AL001 is being evaluated for use in frontotemporal dementia patients with a progranulin gene (PGRN) mutation.
On Tuesday, management unveiled preliminary, early-stage data suggesting AL001 is generally safe and well tolerated but that "due to the COVID-19 pandemic, several clinical sites for the phase 2 study were temporarily closed or conducted reduced or remote patient assessments during the evaluation period. As a result, some participants missed a dose of AL001 or missed clinical assessments during the treatment period."
Worry that enrollment in AL001's trials could be slower than expected and missed doses and follow-up visits could create obstacles to analyzing trial results appear to be outweighing otherwise encouraging data.
Specifically, no treatment-related serious adverse events were observed in participants in its phase 1b trial or within the 10 patients initially dosed in its phase 2 study. Additionally, all the participants in its phase 2 study so far have seen a return of plasma progranulin levels to normal range, hinting at AL001's efficacy.
Alector plans on enrolling 40 people in its phase 2 study, and a phase 3 study was initiated in July.
Frontotemporal dementia is a devastating disease without any treatments approved by the Food and Drug Administration. Of the 170,000 people in the U.S. and European Union with this disease, roughly 15,000 have a mutation that could conceivably be addressed by AL001.
Alector is moving forward with its development timeline for AL001, but investors are right to be a bit cautious. There's a high failure rate in neurodegenerative disease trials, and the impact of COVID-19 on AL001's trials creates uncertainty.
Nevertheless, Alector had $548 million in cash on its balance sheet as of March 31, and it has multiple intriguing drugs in development, including AL002, an Alzheimer's disease drug licensed to AbbVie that's expected to enter phase 2 trials this year. Therefore, this could be an interesting company to keep tabs on.