Alector Surging on GlaxoSmithKline Deal; Analyst Remains Positive

Alector Inc. (ALEC), a clinical stage biotechnology company, has been in the headlines recently.

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With a market capitalization of 3.1 billion, the share price of Alector rocketed almost 89% in the last five days and 153.2% over the past six months.

On Tuesday, the share price of the company surged 12% to close at $39.44 on July 6. The recent price hike could be due to a price target increase from Neena Bitritto-Garg of Citigroup.

The analyst sees the collaboration deal with GlaxoSmithKline (GSK) as “highly positive” for Alector. She remains optimistic about the fact that the clinical programs for AL001/AL101 will be fully financed, with Alector retaining the ownership over AL001.

As a result of the deal, Bitritto-Garg maintained a Buy rating, and increased the price target to $43 from $31, suggesting a possible 12-month upside of 9%.

Alector & GlaxoSmithKline Deal

On July 2, the company entered into a strategic collaboration with British pharma giant GlaxoSmithKline to jointly develop and commercialize its two clinical-stage monoclonal antibodies (AL001 and AL101) for treating neurodegenerative diseases.

Per the deal, Alector will receive an upfront payment of $700 million from Glaxo and will also be eligible to receive up to $1.5 billion in clinical development, regulatory, and commercial launch-related milestone payments. (See Alector stock chart on TipRanks)

Alector will lead the development of AL001 and AL101 to phase II proof-of-concept, following which the two businesses will split development responsibilities and costs for AL001 and AL101 studies.

The closure of the deal depends on customary closing conditions and regulatory approvals under the Hart-Scott-Rodino Act.

If successfully developed and approved, both AL001 and AL101 can lend a significant boost to the scientific community by providing a novel therapeutic approach for the treatment of neurodegenerative diseases.

Analysts’ Rating

On TipRanks, Alector is a Strong Buy based on 4 unanimous Buys. The average Alector price target of $32.75 implies downside potential of almost 17% from the current levels.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Alector, with 12.3% of investors who hold portfolios on TipRanks increasing their exposure to ALEC stock over the past 30 days.