Alto Neuroscience, Inc.

Alto Neuroscience’s stock tumbled 60% on Wednesday morning, the day after the company said a mid-stage trial for its oral small molecule failed to improve symptoms of major depressive disorder. In the Phase 2b trial, which the company described as a first-of-its-kind precision biomarker-based study in psychiatry, ALTO-100 didn’t show improvement over placebo in a change from baseline using the Montgomery-Åsberg Depression Rating Scale (MADRS) in 301 patients at the end of the six-week treatment period. The trial also didn’t hit “key” secondary endpoints that included efficacy versus placebo in MDD as measured using the Clinician Global Impression Scale-severity — a tool used to measure the severity of illness — and remission rates based on MADRS. Alto said the safety and tolerability profile was “favorable” and consistent with previous data. In a Phase 2a study last year, ALTO-100 hit the primary endpoint, with the treatment showing a greater improvement in both the monotherapy and adjunctive treatment groups. “We will move quickly to evaluate the full data set to better understand these findings and incorporate learnings from this large data set across our platform,” Alto CEO Amit Etkin said in a statement , adding that the company expects “our strong cash balance to support us through multiple near-term clinical milestones across our pipeline.” Alto $ANRO went public earlier this year, bringing in $129 million in February, above its original plans to raise $89 million. In its latest financial filing in August, the Eli Lilly-backed startup said it expects its existing cash to provide runway into 2027. ALTO-100 is still being investigated as an adjunctive treatment in a Phase 2b study in bipolar depression. Alto also has several upcoming data readouts for other assets that are expected next year. This includes ALTO-203, an H3 receptor inverse agonist, and ALTO-300 — both in major depressive disorder. In a note on Wednesday, TD Cowen analysts said they were disappointed by the newest slate of data but still “optimistic” about the drug. “We suspect the enrichment signal may have been seen in the adjunct MDD population,” TD Cowen’s Ritu Baral wrote. “Without additional detail on the Ph2b data, we hesitate to extend read-through to the rest of ANRO’s pipeline of agents paired with distinct biomarkers.” Others on Wall Street were more concerned. Jefferies analysts told investors they think the “study’s failure is driven by a lack of drug effect rather than [management] execution error” and that Tuesday’s data “raises questions around ANRO’s overall biomarker approach to CNS/psychiatry.”

Neuropsychiatric drug development is rife with clinical trial failures, but Alto Neuroscience aims to overcome these hurdles with a precision medicine approach that matches a patient to a drug. A clinical trial failure for an Alto depression drug is now casting doubt on this program and the technology that is the foundation for the biotech company’s approach. The Phase 2b failure of the drug, ALTO-100, comes nearly nine months after Mountain View , California-based Alto raised more than $128 million in an IPO priced at $16 per share. Alto shares opened Wednesday at $5.15 each, down 64.5% from Tuesday’s closing stock price. Alto’s platform technology analyzes brain-based biomarkers, looking for the biomarkers that predict response to a drug. Last year, an open-label Phase 2a test of ALTO-100 posted results showing the twice-daily pill led to significant improvement in depressive symptoms in patients characterized by impaired cognition, compared to patients who did not have objectively defined cognitive impairment. sponsored content Upcoming Webinar: Battle of the Budget: Employers vs. Rising Healthcare Costs Gain valuable knowledge and practical insights on how employers are addressing an increasingly complex healthcare budget landscape. By Personify Health The preliminary results announced after Tuesday’s market close are from a placebo-controlled Phase 2b test of ALTO-100, a novel small molecule that Alto acquired from Palisade Bio. The study enrolled 301 patients with major depressive disorder, or MDD, defined by an objective biomarker that was assessed before randomization. This biomarker is low levels of BDNF, a brain protein that promotes neuron survival and health. Participants included those who were already taking depressions drugs, in which case ALTO-100 was evaluated as an adjunct to those therapies. The main goal was measuring the change in score after six weeks according to a rating scale used to assess depression symptoms. Without reporting specific figures, Alto said patients treated with ALTO-100 did not show a statistically significant improvement in depressive symptoms compared to those given a placebo. The drug also failed to beat a placebo in patients who received the study drug as a monotherapy, which was a secondary trial goal. There’s more at stake than MDD. The negative data readout could affect Alto’s plans to test the drug in post-traumatic stress disorder and bipolar depression using the same biomarker as the one used for the MDD trial. William Blair analyst Myles Minter spoke with Alto executives, who told him the trial was well conducted and the placebo response was within historical norms. That’s important because in some depression trials, the test drug shows trending improvement but a high placebo response results in a study failure. If the placebo response in the ALTO-100 trial was normal, then the failure is likely due to the drug not working. Alto management reiterated to Minter that the company will analyze the full data set to determine the next steps for the drug in MDD. “While today’s data points draw increased scrutiny on the biomarker stratification approach, historically placebo-controlled MDD studies have been high-risk, and this one appears no different,” Minter wrote in a note sent to investors. “Still, in our discussions with management, it remained confident in the stratification approach, and we will await a fuller dataset to better understand this optimism despite the negative Phase 2b readout.” presented by Sponsored Post The Promise of Value-Based Care and MedTech Innovation Monica Vajani, Executive Director for mHUB’s MedTech Accelerator, discusses how mHUB is helping innovators transition healthcare towards value-based care. By Monica Vajani - mHUB Alto’s patient-selection strategy may yet prove itself. A Phase 2b test is ongoing for Alto’s ALTO-300 in MDD. This small molecule, which has the non-proprietary name agomelatine, has approvals in Europe and Australia and is sold in those markets by Servier. Novartis held U.S. rights to the molecule, but stopped Phase 3 tests due to liver toxicity. ALTO-300 is the lower of the two doses that Novartis had evaluated in Phase 3. Alto’s trial, which enrolled patients who have a biomarker that could predict response to ALTO-300, is expected to post preliminary data in the first half of 2025. Minter said that compared to ALTO-100, ALTO-300 has already demonstrated antidepressant efficacy in its commercialized markets. Also, this drug’s biomarker is less subjective than the one used for ALTO-100, “which bodes well for stratifying patients, albeit likely tougher to vet and we expect investors to remain cautious after today’s failure,” Minter said. So far, Alto does not have any internally discovered drugs. Besides ALTO-100 and ALT-300, the company’s pipeline includes two other in-licensed assets in development for MDD, both of them going after different targets. The company also has an in-licensed program in development for schizophrenia. As of the end of the second quarter of this year, Alto reported a cash position of $193 million, which it said would be sufficient to fund operations into 2027. Image: Jolygon, Getty Images

iStock, wildpixel Alto Neuroscience’s depression treatment failed to beat placebo just nine months after the biotech went public. The stunning failure called to mind Acelyrin, which faced a similar fate last year. Alto Neuroscience’s Phase IIb therapy has failed to improve symptoms of major depressive disorder compared to placebo, sending the biotech’s shares down 60% in after-market trading Tuesday evening. The clinical failure comes nine months after Alto became one of the earliest biotechs of 2024 to IPO , raising $128.6 million in early February. The stunning failure of ALTO-100 brings back echoes of Acelyrin last year; it was one of the few biotechs to test the IPO waters in 2023, raising a massive $540 million, only to fail a clinical trial a few months later. Alto revealed the failure in an after-market release Tuesday evening. ALTO-100 did not beat placebo in the Phase IIb trial of patients with MDD, however safety and tolerability were as expected. Alto will now conduct a full analysis of the data set to determine next steps. “We are disheartened by the results from this study as the unmet need in this patient population is immense,” said Alto CEO Amit Etkin in a statement. William Blair analysts called the results “a clear miss” for Alto, pointing out that the study was well conducted and the placebo performed according to historical precedent. Stifel similarly said the drug “simply didn’t succeed.” “The press release is light on data details but quite firm in that the trial was a failure, and there (commendably) isn’t any data dredging or overreaching post-hoc analyses in an attempt to salvage the asset,” Stifel noted in a note Tuesday evening. Platform in Question The treatment was developed with Alto’s precision psychiatry platform, which has been touted as a way to develop highly personalized and effective psychiatry therapies. Analysts from Jefferies, William Blair and Stifel wondered what the read-through would be for Alto’s deeper portfolio of neuropsychiatry treatments. “The clear top-line miss of ALTO-100 in MDD undoubtedly will cast investor doubt on Alto’s Precision Neuropsychiatry approach to pair specific mechanisms of action to patient biomarkers of drug response,” William Blair’s team wrote. Alto used a memory-based biomarker to sort patients before randomizing them into treatment and placebo arms. The main endpoint was a rating on the standard Montgomery-Åsberg Depression Rating Scale (MADRS) compared to placebo at the end of the six-week treatment period. The study was conducted in the U.S. with 301 adults. Patients who were in the biomarker-defined group did not demonstrate a statistically significant improvement in depression symptoms compared to placebo. The treatment also did not spur improvement on other pre-specified key secondary endpoints. “While the results are surprising and disappointing, I am proud of our team for conducting a first-of-its-kind precision biomarker-based study in psychiatry. We will move quickly to evaluate the full data set to better understand these findings and incorporate learnings from this large data set across our platform,” Etkin said. ALTO-100 is also being studied in a Phase IIb trial of patients with bipolar disorder. While Alto was taking an innovative approach, William Blair contends the biotech took on one of the toughest challenges: depression itself. “While today’s data points draw increased scrutiny on the biomarker stratification approach, historically placebo-controlled MDD studies have been high-risk, and this one appears no different,” the firm wrote. Sage Therapeutics is one recent example. While the company achieved FDA clearance for Zurzuvae in postpartum depression, the drug was not cleared in MDD because the FDA found the company had failed to provide “substantial evidence of effectiveness” to support approval. Investors will now shift focus to Alto’s next pipeline asset, ALTO-300, which is also in development for MDD with a readout expected in the first half of 2025. The drug, also known as agomelatine, is approved in Europe and Australia for depression. Alto has already completed a Phase IIa study verifying the EEG-based biomarker to be used. William Blair analysts suggested this asset is slightly more de-risked than ALTO-100, given its existing approvals elsewhere in the world. “We still think the Alto precision psych approach has merit, and we do note that all drugs within the pipeline operate by fundamentally different mechanisms-of-action,” Stifel analysts wrote. “In our view, better patient selection, and ‘homogenizing’ trial populations, is still a winning strategy in CNS, and for this reason we do think Alto’s other shots-on-goal for fundamentally different assets should not be written off.” Alto has plenty of cash to operate on despite the failure, Etkin said in the release. The company reported $193.6 million as of June 30 , which will extend its cash runway into 2027 through multiple upcoming readouts. Besides the ALTO-300 readout next year, the company is also expecting one for ALTO-203, also in MDD. Echoes of 2023 Alto’s failure calls to mind a similar stumble last year from Acelyrin, which raised a massive $540 million in an IPO to fuel its immunology aspirations. But just months later, it reported that lead asset izokibep had failed in a Phase IIb/III trial in patients with hidradenitis suppurativa. Acelyrin’s shares tumbled by more than half and sent a chill through the markets that had already been lukewarm to biotech public debuts. Alto’s shares fell 60% to $5.70 in after-market trading Tuesday evening, compared to $14.53 at close just hours before. The company’s shares began trading on February 2 at $22 apiece. Just like Alto, Acelyrin had another arrow in its quiver with izokibep, which later met the primary endpoint of a Phase IIb/III psoriatic arthritis trial. The therapy was also retested in hidradenitis suppurativa, meeting the main goal of a Phase III trial, the company reported in August. Despite the success, Acelyrin has suspended investment in both indications for izokibep and will focus on thyroid eye disease therapy lonigutamab.