Alector (ALEC) recently reported that its experimental therapy latozinemab did not meet the main efficacy goal in a late-stage trial for frontotemporal dementia. As a result, multiple follow-up studies are being discontinued, and the company is reorganizing its operations.
See our latest analysis for Alector.
It has been a dramatic stretch for Alector’s stock. Following news of the Phase 3 trial setback and sweeping operational changes, the one-week share price return plunged by over 50%, and the one-month figure sits at -52.5%. Even before this, momentum had been fading; the 1-year total shareholder return is down 68%, highlighting ongoing challenges for both short- and long-term holders despite a small rebound in the most recent session.
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With steep losses already reflected in Alector’s share price, the key question is whether the market has overreacted and created a bargain, or if the valuation now fairly accounts for fading prospects and future uncertainty.
Alector’s widely followed narrative suggests a fair value notably above the latest $1.50 close, which hints at market pessimism that may be overdone. The most influential argument highlights the importance of pivotal data still to come and the company’s unique approach, setting up a fascinating debate over potential upside versus recent setbacks.
Alector’s proprietary expertise and platform for blood-brain barrier delivery of large therapeutic molecules addresses a critical bottleneck in CNS drug development and enables pipeline programs targeting Alzheimer’s, Parkinson’s, and additional neurodegenerative diseases. This lays the groundwork for sustained long-term revenue growth and enhanced gross margins if these programs advance.
Read the complete narrative.
What is the secret ingredient inside this valuation? The narrative banks on aggressive revenue acceleration and a total earnings turnaround. Does the fair value truly reflect high expectations for scientific breakthroughs and blockbuster partnerships? Readers with an eye for bold forecasts will want to see the numbers driving this price call.
Result: Fair Value of $2.20 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, if regulatory hurdles grow or development setbacks persist, confidence in Alector’s ambitious turnaround narrative could quickly begin to unravel.