Matching a drug to a patient’s biology is not a new idea, but it hasn’t caught on in neuropsychiatric disorders, which have high failure rates in drug studies. The technology of Alto Neuroscience brings precision medicine to psychiatric drug research and its IPO has raised $128.6 million to see if this approach can yield better clinical trial results.
Alto priced its IPO late Thursday, offering more than 8 million shares for $16 apiece. The Los Altos, California-based company was able to raise more than planned. When Alto set preliminary financial terms earlier this week, it projected offering 6.7 million shares in the range of $14 and $16 each, which would have raised $100.5 million at the pricing midpoint. Alto’s shares now trade on the New York Stock Exchange under the stock symbol “ANRO.”
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Alto’s technology finds biomarkers, measurable biological indicators of a disease or disorder. The company specifically looks for brain-based biomarkers by analyzing data from its own clinical research and from data sets acquired or licensed from others. The analysis is intended to identify likely responders to its therapeutic candidates.
“We build upon and leverage vast data sets of longitudinal clinical and biomarker data from thousands of patients across central nervous system, or CNS, disorders, which we believe serves as a foundation for applying our approach across numerous patient populations,” Alto said in the IPO filing. “Ultimately, if we are successful, we believe our approach can substantially improve upon the traditional, all-comer approach to CNS drug development.”
Alto was founded in 2019 by Amit Etkin, a Stanford psychiatry professor. According to the filing, Etkin took a page from oncology, which has progressed with targeted therapies that address certain genetic or biological signatures. Etkin, Alto’s president and CEO, worked to understand the patient biology that can guide the diagnosis and treatment of psychiatric disorders.
Alto emerged from stealth in 2021, announcing $40 million in financing to support a pipeline of 11 clinical-stage precision psychiatry medicines. The company has since winnowed that pipeline to five programs. ALTO-100 and ALTO-300 are the most advanced programs, both of them small molecules in mid-stage clinical development for depression.
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For ALTO-100, the company said study participants have depression characterized by a cognitive biomarker, specifically, low levels of BDNF, a brain protein that promotes neuron survival and health. Alto expects preliminary data from a Phase 2b study in the second half of this year. For ALTO-300, Alto said the study participants have major depressive disorder characterized by an electroencephalography biomarker. That biomarker remains undisclosed. Alto estimates that one or both of these independent biomarkers are present in about three quarters of the overall major depressive disorder population.
Preliminary Phase 2a results for ALTO-300 were reported in December. In addition to showing safety and tolerability, Alto said the drug led to an average 8.3 reduction in score according to a commonly used questionnaire that assesses depression severity. That result compares with a 5.3 reduction in score in patients who do not have the biomarker. A Phase 2 b study is underway in a larger group of patients. Preliminary data are expected in the first half of next year.
Alto said expects it will need to develop companion diagnostics that identify biomarkers in patients. In the filing, the company said it plans to discuss this matter with the FDA during end of Phase 2 meetings for ALTO-100 and ALTO-300.
While Alto’s research has identified novel brain-based biomarkers, what the company’s pipeline does not yet have is internally discovered drugs. ALTO-300 was initially developed and tested by Servier, which won approvals for the molecule in Europe and Australia. Novartis acquired U.S. rights but stopped Phase 3 tests due to liver toxicity (Alto is testing a lower dose hoped to pose a lower toxicity risk). ALTO-100 was acquired from Palisade Bio, which had taken that molecule into Phase 2 testing.
In addition to the two lead therapeutic candidates, Alto has two additional programs on the way to proof-of-concept mid-stage testing this year. ALTO-101, licensed from Sanofi, is in development for patients with cognitive impairment with schizophrenia. ALTO-203, acquired from Teva Pharmaceutical and its affiliate Cephalon, is in development for major depressive disorder patients who experience lack of motivation or pleasure. Preliminary data for both are expected in 2025. The fifth Alto program, ALTO-202, is a depression drug candidate licensed from Cerecor.
Since its formation in 2019, Alto had raised $142.7 million prior to the IPO, the filing states. The most recent financing was a $45 million Series C round this past November. With the IPO proceeds, Alto expects it will have enough capital to last for the next two years.
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