Stock Traders Buy Large Volume of Put Options on Alector (NASDAQ:ALEC)

Key Points

• Unusual bearish options activity: Traders bought 20,569 put options on Alector, roughly 5,950% above the typical daily volume of 340 puts.
• Genentech licensing deal provides major potential upside: Genentech obtained global rights to Alector’s preclinical AL050 Parkinson’s therapy, including a reported $100 million upfront payment, up to $1.27 billion in milestones and royalties. However, the program remains subject to development and regulatory risks.
• Insiders reduced their holdings while shares weakened: Alector’s CEO and CFO sold a combined 101,857 shares, while the stock fell 1.8% to $1.96. Analysts maintain an overall “Hold” consensus, with a $3.40 average price target.

Alector, Inc. (NASDAQ:ALEC - Get Free Report) was the recipient of some unusual options trading activity on Tuesday. Stock traders bought 20,569 put options on the stock. This is an increase of approximately 5,950% compared to the typical daily volume of 340 put options.

Insider Buying and Selling

In related news, CFO Neil Berkley sold 29,251 shares of the business's stock in a transaction dated Thursday, September 3rd. The shares were sold at an average price of $2.66, for a total value of $77,807.66. Following the sale, the chief financial officer directly owned 350,649 shares in the company, valued at approximately $932,726.34. The trade was a 7.70% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, CEO Arnon Rosenthal sold 72,606 shares of the company's stock in a transaction dated Thursday, September 3rd. The shares were sold at an average price of $2.66, for a total transaction of $193,131.96. Following the completion of the transaction, the chief executive officer directly owned 2,294,600 shares in the company, valued at $6,103,636. The trade was a 3.07% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold 111,303 shares of company stock worth $295,633 over the last quarter. 8.30% of the stock is currently owned by insiders.

Institutional Trading of Alector

Hedge funds have recently added to or reduced their stakes in the company. The Manufacturers Life Insurance Company purchased a new stake in shares of Alector in the 2nd quarter valued at approximately $39,000. Diversified Trust Co grew its stake in shares of Alector by 83.6% during the first quarter. Diversified Trust Co now owns 25,895 shares of the company's stock worth $56,000 after purchasing an additional 11,793 shares in the last quarter. Hsbc Holdings PLC purchased a new position in Alector in the second quarter valued at $98,000. Sei Investments Co. raised its stake in Alector by 218.9% in the first quarter. Sei Investments Co. now owns 53,846 shares of the company's stock valued at $116,000 after buying an additional 36,962 shares in the last quarter. Finally, Ieq Capital LLC acquired a new stake in Alector in the second quarter valued at $122,000. Institutional investors and hedge funds own 85.83% of the company's stock.

Alector Stock Down 1.8%

Shares of NASDAQ ALEC traded down $0.04 during mid-day trading on Tuesday, hitting $1.96. The company had a trading volume of 6,519,958 shares, compared to its average volume of 1,430,754. The company has a market capitalization of $218.29 million, a PE ratio of -1.78 and a beta of 0.62. The company has a debt-to-equity ratio of 0.80, a current ratio of 5.26 and a quick ratio of 5.26. Alector has a 1-year low of $1.09 and a 1-year high of $3.40. The business's 50-day simple moving average is $2.05 and its 200 day simple moving average is $2.03.

Alector (NASDAQ:ALEC - Get Free Report) last released its earnings results on Thursday, August 6th. The company reported ($0.21) EPS for the quarter, topping the consensus estimate of ($0.23) by $0.02. The firm had revenue of $3.32 million during the quarter, compared to analysts' expectations of $1.71 million. Alector had a negative return on equity of 531.03% and a negative net margin of 850.13%. On average, analysts predict that Alector will post -0.87 earnings per share for the current year.

Key Stories Impacting Alector

Here are the key news stories impacting Alector this week:

• Positive Sentiment: Genentech obtained exclusive global rights to develop and commercialize AL050, a brain-penetrant GCase enzyme replacement therapy designed to treat Parkinson’s disease and potentially other neurodegenerative conditions. The therapy uses Alector’s proprietary Alector Brain Carrier platform to cross the blood-brain barrier. Alector Genentech AL050 licensing announcement
• Positive Sentiment: The agreement includes a reported $100 million upfront payment and could generate as much as $1.27 billion in milestone payments, in addition to royalties on potential future sales. The partnership gives Alector access to Roche’s development and commercialization resources while providing important validation for its blood-brain-barrier technology. Genentech pays Alector $100 million for Parkinson’s prospect
• Neutral Sentiment: Coverage highlighting the Nobel Prize awarded to optogenetics researchers may improve investor interest in neuroscience and brain-delivery technologies, but it does not directly change Alector’s financial outlook or AL050’s clinical prospects. Optogenetics researchers win Nobel Prize; Roche bets on Alector brain drug
• Negative Sentiment: AL050 remains a preclinical program, so the headline milestone value is dependent on future development, regulatory and commercial achievements. Investors may also be taking profits after the initial licensing-driven rally, contributing to subsequent weakness in ALEC shares.

Analyst Upgrades and Downgrades

Several equities analysts have recently commented on ALEC shares. Weiss Ratings upgraded shares of Alector from a "sell (e+)" rating to a "sell (d-)" rating in a report on Thursday, August 13th. Morgan Stanley restated an "underweight" rating and set a $3.00 price target on shares of Alector in a research note on Tuesday. Finally, UBS Group restated a "neutral" rating and set a $1.50 price target on shares of Alector in a research report on Tuesday. Three research analysts have rated the stock with a Buy rating, four have given a Hold rating and two have issued a Sell rating to the company. According to MarketBeat.com, Alector has an average rating of "Hold" and a consensus target price of $3.40.

About Alector

Alector, Inc is a clinical-stage biotechnology company focused on developing therapies for neurodegenerative diseases. The company's approach, known as immuno-neurology, seeks to use the immune system to protect brain health and address biological mechanisms involved in conditions such as Alzheimer's disease, frontotemporal dementia and Parkinson's disease.

Alector's pipeline includes latozinemab, an antibody designed to increase levels of progranulin, a protein associated with the health and function of brain cells.

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