Alector, a California-based biotechnology company developing drugs for brain diseases, plans to lay off around 30 employees as part of a larger effort to reprioritize research programs.
At the end of last year, Alector had 273 full-time employees, roughly 80% of whom were engaged in research and development activities. According to a new regulatory filing, the company on March 28 committed to reduce its workforce by 11% to “better align” resources with its more advanced immuno-neurology programs. Those programs respectively target the proteins progranulin and Trem2, which play a role in inflammation and have been linked to neurodegenerative diseases.
Alector said the layoff process began Wednesday and should be completed by the end of June. The company expects that its existing cash position will enable it to operate through 2025, by which point it will have passed “key clinical milestones” for the prioritized programs.
As of Dec. 31, Alector had $713 million worth of cash, cash equivalents and marketable securities. The company anticipates one-time restructuring charges of approximately $2.2 million in association with its workforce reduction.
Alector was formed a decade ago by a four-person team consisting of Arnon Rosenthal, a longtime researcher at Genentech; Tillman Gerngross, a bioengineer and co-founder of the antibody discovery company Adimab; Asa Abeliovich, a high-profile neuroscientist; and Errik Anderson, a biotech entrepreneur.
By late 2013, the company had completed a Series A funding round led by the powerful venture capital firms Polaris Venture Partners and OrbiMed Advisors. It went on to raise hundreds of millions of dollars in subsequent funding rounds and, in 2019, brought in another $176 million through an initial public offering.
Over the years, Alector attracted interest from large pharmaceutical companies too. It inked collaborations with the Johnson & Johnson Innovation Center in 2014, with AbbVie in 2017 and with GSK in 2021.
Neurology, though, is a notoriously difficult area of drug research, and Alector hasn’t gone without setbacks. The company announced last year, for example, that AbbVie had decided to back away from one of the two drugs they were partnered on, following a review of early-stage clinical data.
Alector’s stock price is now about one-third of what it was when the company went public. As of Thursday morning, shares were trading at a little over $6 apiece.
Alector now joins a list of over 50 drug developers that have announced job cuts this year. The layoffs have come amid an economic downturn that’s made finding additional sources of funding — whether public or private — much more difficult for biotech companies.