Alector, US-based immuno-neurology therapy developer backed by corporates AbbVie, Eli Lilly, Alphabet, Amgen and Merck & Co, will raise $176m when it floats on the Nasdaq Global Select Market today.
The company priced 9.25 million shares at $19.00 each, in the middle of the $18 to $20 range it set for the initial public offering, valuing it at almost $1.3bn. Unnamed shareholders had expressed interest in buying $85m of shares in the IPO but it has not been revealed whether they did so.
Founded in 2013, Alector is developing drugs that will combat neurodegeneration by using methods pioneered in immunology and genetics medicine development, targeting dysfunction in the body’s immune system that trigger disorders leading to neurological deterioration.
Some 40 immune system targets have been designated by Alector, which has more than 10 programs undergoing preclinical research. It will put $50m into phase 1, 2 and 3 trials for an frontotemporal dementia candidate called AL001 and phase 1 trials for an Alzheimer’s disease candidate, AL002.
A further $25m will fund the progress of two more candidates, AL003 and AL101, for Alzheimer’s and multiple neurodegenerative disorders respectively, into phase 1 trials, and $40m will be used to prepare AL002 and AL003 for phase 2 testing.
Alector will spend $25m to move its preclinical drug candidates toward phase 1 trials while $15m will support further development of its drug discovery platform. The offering follows more than $195m of venture funding.
Polaris Partners and OrbiMed supplied series A funding for Alector in 2013 before Janssen, a subsidiary of medical group Johnson & Johnson, added an undisclosed amount of series B capital in 2014.
The company raised $32m in a 2015 series C round led by Merck unit MRL Ventures that included GV, the subsidiary of internet technology conglomerate Alphabet then known as Google Ventures, as well as OrbiMed, Polaris, Topspin Partners and Mission Bay Capital.
GV and MRL Ventures returned for Alector’s $29.5m series D round in 2016, investing alongside pharmaceutical companies Amgen and AbbVie, the former through its Amgen Ventures unit, together with Dementia Discovery Fund (DDF) and the rest of the series C backers.
Alector added $133m in a July 2018 series E round that included corporate venturing units GV, AbbVie Ventures, Amgen Ventures, MRL Ventures and Lilly Asia Ventures, the latter a subsidiary of pharmaceutical firm Eli Lilly,
DDF, Polaris Partners, OrbiMed, Mission Bay Capital, Deerfield Management, Federated Kaufmann Fund, Section 32, Euclidean Capital, Foresite Capital, New Leaf Venture Partners, Perceptive Advisors and Casdin Capital also contributed to the round.
MRL Ventures is Alector’s largest corporate shareholder, with a 6% stake that will be diluted to 5.2%. The 21.7% share held by Polaris will be cut to 18.8% while OrbiMed’s 21.4% stake will be reduced to 18.5%.
Morgan Stanley, BofA Merrill Lynch, Cowen and Barclays are joint book-running managers for the IPO and will have the 30-day option to acquire almost 1.4 million additional shares that would boost its size to more than $202m.
