Alector Shares Plunge After Dementia Drug Fails Late-Stage Trial
The biotech firm will cut nearly half of its workforce as it discontinues development of its lead drug candidate, latozinemab, for frontotemporal dementia.
Alector Inc. (NASDAQ: ALEC) shares fell sharply in Tuesday trading after the company announced its lead drug candidate, latozinemab, failed to meet its primary goal in a pivotal Phase 3 study for a rare form of dementia, prompting a significant corporate restructuring that includes cutting its workforce by 49%.
The South San Francisco-based biotechnology firm disclosed that the INFRONT-3 trial for latozinemab in patients with frontotemporal dementia (FTD) due to a progranulin gene mutation (FTD-GRN) did not demonstrate a statistically significant slowing of disease progression. The primary clinical endpoint was measured by a standard neurological assessment scale known as the CDR® plus NACC FTLD-SB.
The outcome represents a major setback for Alector, as latozinemab was its most advanced clinical program and was aimed at a devastating neurodegenerative disease with no approved treatments. In response to the trial failure, Alector announced it would discontinue the open-label extension of the study. The company's stock, which had a 52-week high of $6.14, saw heavy selling pressure following the news.
"This is a disappointing outcome for patients with FTD-GRN and their families, who are in desperate need of new treatment options," the company stated in its official press release. While the drug failed to impact clinical progression, Alector noted that it did achieve a statistically significant effect on a biomarker co-primary endpoint, successfully increasing plasma progranulin concentrations. However, this biological activity did not translate into clinical benefit, as secondary endpoints related to fluid biomarkers and brain imaging also showed no treatment effect.
The failure of latozinemab has immediate and severe consequences for the company's operations. Alector is initiating a corporate restructuring that will reduce its workforce by approximately 49%. The company expects these measures, combined with its existing cash reserves of around $291 million as of September 30, 2025, to extend its financial runway through 2027.
The news casts a pall over the high-risk, high-reward field of neurodegenerative drug development. FTD is a fatal and rapidly progressing form of dementia that typically affects people in their 40s to 60s. Alector's approach, targeting the progranulin pathway, was based on a strong genetic rationale and was closely watched by investors and the scientific community.
Prior to the announcement, analyst sentiment had been cautiously optimistic, contingent on a positive trial outcome. , highlighting the binary nature of the impending data release. The trial failure will almost certainly trigger a wave of downgrades and price target revisions across Wall Street.
With latozinemab's future in doubt, Alector is shifting its focus and resources to the rest of its pipeline. The company highlighted its ongoing collaboration with GSK on nivisnebart, a treatment for early Alzheimer's disease currently in a Phase 2 trial, with an interim analysis expected in the first half of 2026.
Furthermore, Alector is advancing multiple preclinical programs using its proprietary Alector Brain Carrier (ABC) technology platform, which is designed to transport therapies across the blood-brain barrier. According to its , the company plans to submit Investigational New Drug (IND) applications for two ABC-enabled candidates: one targeting amyloid beta in Alzheimer's in 2026 and another for a GCase enzyme replacement therapy in Parkinson's disease in 2027. Investors will now be watching these earlier-stage programs for signs of progress as the company navigates the fallout from its Phase 3 disappointment.