Alector, Inc. (ALEC)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties, including those described in the section titled “Special Note Regarding Forward-Looking Statements.” Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section titled “Risk Factors” included elsewhere in this report.

Overview

We are a biotechnology company focused on discovering and developing therapies for neurodegenerative diseases with high unmet medical need, including Alzheimer’s disease and Parkinson’s disease. Our wholly owned pipeline is built around the Alector Brain Carrier (ABC) platform, a proprietary blood-brain barrier (BBB) technology that enables diverse therapeutic modalities, including antibodies, enzymes, proteins and siRNA, to reach genetically validated targets in the central nervous system.

The ABC platform is designed to enhance brain exposure while optimizing both safety and efficacy. Built on the principles of versatility, translatability, and differentiated binding to a distinct region of the transferrin receptor (TfR), the platform supports efficient delivery of therapeutic cargos across the BBB. By offering a broad range of TfR binding affinities, binding kinetics, and engineered formats, the ABC platform can be tailored to the requirements of different therapeutic modalities while preserving the ability to recruit the brain’s immune system when desired. These proprietary features are intended to balance brain uptake, potency, and safety across our pipeline.

Our next-generation portfolio, built on the ABC platform and distinct from our prior clinical programs, is designed to address neurodegenerative diseases through targeted mechanisms, including the removal of pathogenic proteins, replacement of deficient proteins, and restoration of normal cellular function.

AL137 Program

Our AL137 program, combines our proprietary anti-amyloid beta (Aβ) antibody with our proprietary ABC platform, for the treatment of Alzheimer’s disease (AD). It is designed to efficiently remove brain Aβ plaques, with the goal of minimizing treatment-related adverse effects and enabling convenient subcutaneous administration.

The ABC platform was specifically engineered to reduce co-engagement of transferrin receptor (TfR) on reticulocytes and peripheral immune cells while preserving full Fc-mediated engagement of immune cells at Aβ plaques. This design is intended to achieve efficient plaque clearance while minimizing the hematologic adverse effects associated with TfR-targeting antibodies.

AL137 incorporates a high-affinity, fully human antibody that selectively binds pyroglutamate-3 Aβ (PyroGlu3 Aβ), a validated and pathogenic form of Aβ enriched in amyloid plaques. In preclinical studies, AL137 demonstrated robust brain penetration in non-human primates, while a murine surrogate has shown significant reduction of brain Aβ42 levels in Alzheimer’s disease mouse models.

Following comparative evaluation of AL137 and AL037, we selected AL137 as the lead development candidate and subcutaneous administration as the intended clinical route, with AL037 designated as the backup development candidate. Following successful completion of IND-enabling studies, we intend to advance AL137 for submission of an Investigational New Drug (IND) application, targeted for the first quarter of 2027. We also target first-in-human dosing in Australia no later than April 2027.

ABC-Enabled siRNA Platform

We continue to advance our ABC-enabled siRNA platform. The platform is designed for peripheral dosing, offering the potential for more convenient and scalable administration compared with traditional intrathecal delivery, as well as the potential for homogeneous drug distribution throughout the brain. Our siRNA programs span multiple disease mechanisms, led by our tau program, AL064/AL164, and including earlier-stage programs advancing toward lead selection: ADP062-ABC, an alpha-synuclein siRNA for PD, and ADP065-ABC, an NLRP3 siRNA for multiple neurodegenerative conditions. Together, these programs reflect the broad applicability of the ABC platform across disease mechanisms. We continue to evolve our research and development plans and timing for each of our ABC-enabled siRNA programs.

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AL064/AL164 Program

Our lead siRNA program, AL064/AL164, is a tau siRNA program for AD and other tauopathies. AL064/AL164 aims to reduce all forms of toxic tau by degrading tau mRNA and reducing tau protein expression and slow cognitive decline in AD and other tauopathies. AL064 demonstrated robust and homogeneous tau mRNA knockdown and durable reduction of phospho-Tau 217 in multiple NHP brain regions tested. AL064 was modified to incorporate a well-validated chemical modification intended to further optimize siRNA stability, and this modified form of AL064 is advancing into IND-enabling studies as AL164.

AL050 Program

AL050 is a lysosomal glucocerebrosidase (GCase) enzyme replacement therapy paired with our proprietary ABC technology in preclinical development for Parkinson’s disease and Lewy body dementia in patients having GBA1 gene mutations that lead to reduced GCase activity. AL050 features an engineered GCase with improved activity and stability, a silenced effector function to maximize safety, and Alector’s ABC that binds a TfR epitope with affinity designed to enhance delivery across the BBB. This mechanism aims to reduce cellular dysfunction and slow disease progression. In preclinical studies to date, AL050 doubled GCase activity in different brain regions in non-human primates without observed adverse effects, including hematologic effects. In a GBA disease mouse model, AL050 surrogate rescued GCase activity and reduced toxic substrate accumulation without hematologic findings. These data support the potential of AL050 as a disease modifying therapy for Parkinson’s disease (PD) and Lewy body dementia (LBD) associated with GBA loss of function mutations, and subsequently for idiopathic PD and LBD.

We have selected AL050 as the lead candidate, and we continue to evaluate our timeline to the clinic.

Nivisnebart

In April 2026, GSK discontinued the global Phase 2 PROGRESS-AD trial of nivisnebart (AL101/GSK4527226), an investigational progranulin-elevating monoclonal antibody, in individuals with early Alzheimer’s disease (AD), following a pre-specified interim futility analysis conducted by an Independent Data Monitoring Committee (IDMC). The IDMC concluded that the trial was unlikely to meet its primary endpoint of slowing disease progression at completion.

Our operations have been financed primarily through our collaboration with GSK, for which GSK provided written notice of termination on July 6, 2026, our previous collaboration with AbbVie, entered into in October 2017 and terminated in February 2025, the issuance and sale of convertible preferred stock and of common stock upon the completion of our initial public offering (IPO), and follow-on equity financings.

To date, we have not had any products approved for sale and have not generated any product or royalty revenue from product sales. Further, we do not expect to generate revenue from product sales until such time, if ever, that we are able to successfully complete the development and obtain marketing approval for one of our product candidates. We will continue to require additional capital to develop our product candidates, advance our research and preclinical programs, and fund operations for the foreseeable future. We have incurred net losses in each year since inception, and we expect to continue to incur net losses for the foreseeable future. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. Our net losses were $23.0 million and $45.9 million for the three and six months ended June 30, 2026, respectively. Our net losses were $30.5 million and $71.0 million for the three and six months ended June 30, 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $1,018.0 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

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advance product candidates through preclinical studies and clinical trials;

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pursue regulatory approval of product candidates;

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discover, validate, and develop additional product candidates;

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manufacture drug supply for our research, preclinical studies and clinical trials; and

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obtain, maintain, and protect our intellectual property portfolio.

On March 7, 2025, we committed to a plan to reduce our workforce by approximately 13% to better align our resources with our strategic priorities, including the advancement of our preclinical and research pipeline. We initiated that reduction in force impacting approximately 25 employees across the organization. On October 21, 2025, we committed to a plan to reduce our workforce by approximately 47% in order to align resources with the Company’s strategic priorities following the results of the Phase 3 INFRONT-3 clinical trial evaluating the safety and efficacy of latozinemab (AL001) in individuals with

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frontotemporal dementia due to a GRN mutation (FTD-GRN). Our cash, cash equivalents, and marketable securities as of June 30, 2026, totaled $172.8 million, which we anticipate provides runway at least through 2027.

Components of Results of Operations

Revenue

We have not generated any product or royalty revenue from product sales and do not expect to do so in the near future. Our revenue to date has been primarily related to the AbbVie Agreement and GSK Agreement for the license and co-development of product candidates with those parties. We recognized revenue from the upfront payments and the milestone payment received from AbbVie over time as services were provided. We recognize revenue from the upfront payments from GSK at a point in time for a development license and over time for research and development services. Revenues for research and development services are recognized as the program costs are incurred by measuring actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation.

The Company and GSK discontinued developing latozinemab and nivisnebart in FTD-GRN and AD, respectively, following the INFRONT-3 Phase 3 clinical trial readout in October 2025 and the PROGRESS-AD Phase 2 clinical trial interim analysis in April 2026 for those product candidates. On July 6, 2026, GSK provided written notice to the Company terminating the GSK Agreement (“Notice”). Under the terms of the GSK Agreement, the termination will be effective 180 days from the Notice, or January 2, 2027.

Under the terms of the GSK Agreement, the Company received $700 million in upfront payments, of which $500 million was received in August 2021 and $200 million was received in January 2022. The Company had been eligible for but did not achieve up to an additional $1.5 billion in clinical development, regulatory, and commercial launch-related milestone payments; an equal share of profits and losses in the United States; and tiered royalties outside the United States. The Company and GSK jointly conducted certain development activitie

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties, including those described in the section titled “Special Note Regarding Forward Looking Statements.” Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section titled “Risk Factors” included elsewhere in this report.

Overview

We are a clinical-stage biotechnology company developing therapies for neurodegenerative diseases, with a focus on areas of high unmet medical need. Our work is informed by advances in disease biology, including the roles of misfolded or deficient proteins, lysosomal dysfunction, and immune and neuronal pathway disruption.

Our objective is to develop product candidates that address disease through targeted mechanisms, such as removing pathogenic proteins, replacing deficient proteins, and restoring normal cellular function. We are advancing a portfolio of programs focused on genetically validated targets, supported by our experience in drug development, protein engineering, and antibody discovery.

A key component of our strategy is the development and application of our Alector Brain Carrier (ABC) platform, a proprietary blood-brain barrier (BBB) delivery technology designed to improve central nervous system exposure across multiple therapeutic modalities. We continue to refine and expand this platform to enable effective brain delivery at clinically practical doses of antibodies, enzymes, and siRNA therapeutics. In parallel, we are investing in biomarkers and biomarker assays to guide patient selection, demonstrate target and pathway

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engagement, and assess biological impact in the clinic, with the goal of improving development efficiency and the likelihood of technical success.

Our portfolio includes nivisnebart (formerly AL101/GSK4527226), an investigational PGRN-elevating antibody that has completed enrollment in a placebo-controlled, double-blinded Phase 2 study in early Alzheimer’s disease under our July 2021 Collaboration and License Agreement (GSK Agreement) with Glaxo Wellcome UK Limited, a subsidiary of GlaxoSmithKline plc (GSK).

In addition, our wholly owned programs include lead candidates in preclinical development for a brain-penetrant anti-amyloid beta antibody for Alzheimer’s disease (AD) and a brain-penetrant GCase enzyme replacement therapy for Parkinson’s disease (PD). We are also advancing brain-penetrant siRNA programs targeting tau for Alzheimer’s disease, α-synuclein for Parkinson’s disease, and NLRP3, with potential applications across multiple neurodegenerative conditions.

Our operations have been financed primarily through our collaboration with GSK, our previous collaboration with AbbVie, entered into in October 2017 and terminated in February 2025, the issuance and sale of convertible preferred stock and of common stock upon the completion of our initial public offering (IPO), and follow-on equity financings.

To date, we have not had any products approved for sale and have not generated any product or royalty revenue from product sales. Further, we do not expect to generate revenue from product sales until such time, if ever, that we are able to successfully complete the development and obtain marketing approval for one of our product candidates. We will continue to require additional capital to develop our product candidates, advance our research and preclinical programs, and fund operations for the foreseeable future. We have incurred net losses in each year since inception, and we expect to continue to incur net losses for the foreseeable future. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. Our net losses were $142.9 million and $119.0 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $972.1 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

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advance product candidates through preclinical studies and clinical trials;

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pursue regulatory approval of product candidates;

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discover, validate, and develop additional product candidates;

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require the manufacture of drug supply for our research, preclinical studies and clinical trials; and

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obtain, maintain, and protect our intellectual property portfolio.

On March 7, 2025, we committed to a plan to reduce our workforce by approximately 13% to better align our resources with our strategic priorities including advancing our preclinical and research pipeline. We initiated such reduction in force impacting approximately 25 employees across the organization. On October 21, 2025, we initiated a reduce in force that impacted approximately 47% our workforce in order to align resources with the Company’s strategic priorities following the results of the Phase 3 INFRONT-3 clinical trial evaluating the safety and efficacy of latozinemab in individuals with frontotemporal dementia due to a progranulin gene mutation (FTD-GRN). As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $256.0 million, which we anticipate provides runway at least through 2027.

Components of Results of Operations

Revenue

We have not generated any product or royalty revenue from product sales and do not expect to do so in the near future. Our revenue to date has been primarily related to the AbbVie Agreement and GSK Agreement for the license and co-development of product candidates with those parties. We recognized revenue from the upfront payments and the milestone payment received from AbbVie over time as services were provided. We recognize revenue from the upfront payments from GSK at a point in time for a development license and over time for research and development services. Revenues for research and development services are recognized as the program

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costs are incurred by measuring actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation.

Under the terms of the GSK Agreement, we received $700 million in upfront payments, of which $500 million was received in August 2021 and $200 million was received in January 2022. In addition, we may be eligible to receive up to an additional $1.5 billion in clinical development, regulatory, and commercial launch-related milestone payments, subject to successful advancement and commercialization of product candidates in multiple indications under the agreement. Alector and GSK are conducting development jointly. Under the current terms of the GSK Agreement, we are responsible for funding GSK’s and our development costs up to $140.5 million for the conduct of the initial Phase 2 clinical trial of nivisnebart in AD.

In the United States, Alector and GSK agreed to equally share profits and losses from commercialization of product candidates under the agreement. We may opt out of the sharing of development costs and of profit and losses from commercialization in the United States on a product-by-product basis. In such case, we will no longer conduct development or commercialization of that product, we will receive royalties on net sales of the product in the United States instead of a share of profits, and certain milestones will be reduced. Outside of the United States, GSK agreed to responsible for commercialization of latozinemab and nivisnebart for all indications, and we will be eligible for double-digit tiered royalties.

We expect that our revenue for the next several years will be derived primarily from the GSK Agreement. The balance of deferred revenue was $171.2 million as of December 31, 2025, related to the GSK Agreement. The deferred revenue is expected to be recognized over the research and development period of the programs through the completion of the initial Phase 2 clinical trials for specified indications for latozinemab and nivisnebart.

Research and Development Expenses

Research and development expenses account for a significant portion of our operating expenses. We record research and development expenses as incurred. Research and development expenses consist primarily of costs incurred for the discovery and development of our product candidates, which include:

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expenses incurred under agreements with third-party contract organizations, preclinical testing organizations, and consultants;

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costs related to production of research, preclinical, and clinical materials, including fees paid to contract manufacturers;

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laboratory and vendor expenses related to the execution of research, preclinical studies and clinical trials;

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personnel-related expenses, including salaries, benefits, and stock-based compensation for personnel engaged in research and development functions;

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costs related to the preparation of regulatory submissions;

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third-party license fees; and

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facilities and other expenses, which include expenses for rent and maintenance of facilities, depreciation and amortization expense, and other supplies.

We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors, collaborators, and third-party service providers. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and as services are performed.

Specific program expenses include expenses associated with the development of our most advanced product candidate, nivisnebart, which is being studied in the PROGRESS-AD Phase 2 clinical trial. We also have expenses related to the research and development of future product candidates and separately tracked expenses related to programs that we expect to move out of preclinical studies and into Phase 1 clinical trials. These expenses primarily relate to salaries and benefits, stock-based compensation, facility expenses, including depreciation, and lab consumables.

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Where we share costs with our collaboration partners, such as in our GSK Agreement, research and development expenses may include reimbursements from, or payments to, our partner.

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We expect our research and development expenses relating to latozinemab and AL002 to decrease in the foreseeable future as a result of the discontinuation and wind-down of clinical trials for latozinemab and AL002. However, we continue to invest in research and development activities related to programs in our research and preclinical pipeline and to the advancement of those programs into clinical trials.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for our personnel in executive, legal, finance and accounting, inf

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