ALEC · Alector, Inc.

Alector reported collaboration revenue of $1.0 million for Q1 FY2026, down 71.5% from $3.7 million in the prior year quarter. This decline reflects reduced manufacturing activity tied to discontinued programs, including the termination of the AL002 program and lower activity for the Nivisnebart Phase 2 study. Despite the revenue drop, operating income improved markedly to -$24.9 million from -$44.7 million, a 44.2% narrowing of losses. This progress stems from substantial cost reductions, primarily driven by decreases in personnel-related costs following reductions in force, as well as lower research and development expenses associated with the discontinued AL002 program.

Net income followed a similar trajectory, improving 43.3% to -$22.9 million from -$40.5 million, with diluted EPS advancing 48.8% to -$0.21 from -$0.41. These enhancements demonstrate the impact of management's cost discipline initiatives, which have outpaced the revenue contraction and positioned the company to manage its burn rate more effectively amid a strategic pivot to preclinical programs.

Management's commentary in Item 2 emphasizes that R&D costs are expensed as incurred, with capitalized amounts recognized as goods are delivered or services performed. The reductions in force have directly lowered personnel expenses across functions, enabling narrower losses while the company advances its ABC platform in preclinical stages. However, prior and expected future losses continue to pressure stockholders' equity and working capital, as noted in risk factors. Alector will require additional capital to develop product candidates, advance research programs, and fund operations, with operating plans subject to potential changes.