Alector Shares Collapse After Dementia Drug Fails in Phase 3 Trial
Company to cut workforce by nearly half and abandon latozinemab program, shifting focus to its Alzheimer's pipeline.
Alector Inc. (ALEC) saw its shares plummet nearly 50% in after-hours trading Tuesday after announcing its lead drug candidate for a rare, inherited form of dementia failed a pivotal late-stage clinical trial. The devastating setback prompted the company to immediately halt the program and announce a significant corporate restructuring, including cutting its workforce by approximately 49%.
The South San Francisco-based biotechnology firm disclosed that its Phase 3 INFRONT-3 trial for latozinemab, a potential treatment for frontotemporal dementia with a progranulin gene mutation (FTD-GRN), did not meet its primary endpoint. According to the , the drug failed to demonstrate a statistically significant slowing of disease progression compared to a placebo.
The trial's failure is a major blow to Alector, which had positioned latozinemab as its most advanced asset. While the drug was shown to be safe and successfully increased levels of the target progranulin protein, this biological effect did not translate into a clinical benefit for patients. The primary endpoint was a unified score measuring cognitive, functional, and behavioral decline, which showed no meaningful difference between the treatment and placebo groups after 48 weeks.
In response to the results, Alector is discontinuing the latozinemab program, including its open-label extension study. The company is now undertaking drastic measures to conserve capital and refocus its efforts. The workforce reduction will impact roughly 75 employees. Further underscoring the shift in strategy, Alector also announced that Sara Kenkare-Mitra, Ph.D., the company's President and Head of Research and Development, will resign effective December 22, 2025.
Investors reacted swiftly to the news. After closing the regular session at $3.21, Alector's shares cratered by 49% in after-hours trading, wiping out a significant portion of its approximately $335 million market capitalization.
Frontotemporal dementia is a progressive and devastating neurodegenerative disease that typically affects individuals younger than 65. The FTD-GRN mutation accounts for a small but significant subset of cases, and there are currently no approved therapies that can slow its progression.
With its lead program abandoned, Alector will pivot its resources to its remaining pipeline. The company highlighted its focus on nivisnebart, a treatment for early Alzheimer's disease being developed in partnership with GSK, which has Phase 2 data expected in 2026. Alector will also advance its proprietary Blood-Brain Barrier (ABC) technology platform, with new drug applications planned for 2026 and 2027, .
The company stated that its existing cash reserves of approximately $291 million as of September 30, 2025, are expected to fund its revised operating plan through 2027. This financial runway gives the restructured company time to pursue its remaining, albeit earlier-stage, programs. However, the failure of latozinemab serves as a stark reminder of the high-risk, high-reward nature of biotech investing, particularly in the challenging field of neurodegenerative disease.