Alto Neuroscience Accelerates Depression Drug Development with $50 Million Boost

Alto Neuroscience, a psychiatry drug specialist, has announced plans to expedite the development of its potential depression medicine, ALTO-207, following a successful meeting with the Food and Drug Administration (FDA). The company's shares more than doubled on Monday as investors reacted positively to the news, which included a $50 million private placement to fund a Phase 3 study.

ALTO-207: A Novel Approach to Treatment-Resistant Depression

ALTO-207 combines a drug used to treat Parkinson's disease with the active ingredient in the nausea medication Zofran. Alto acquired this experimental, dopamine-boosting drug from Chase Therapeutics earlier this year for less than $2 million. The company now aims to initiate a late-stage study by early 2027, building on its plans to start a mid-stage clinical trial by mid-2026.

Amit Etkin, Alto's founder and CEO, stated, "The successful outcome of our recent FDA meeting was a critical step forward for this program. We believe we are well-positioned to advance ALTO-207 for the many patients who are not adequately served by current therapies."

Financial Boost and Market Potential

To support the accelerated development of ALTO-207, Alto has secured a $50 million private placement financing. The deal involves selling 3.8 million shares of common stock at approximately $6 per share, with some investors also able to purchase pre-funded warrants for up to 4.6 million additional shares at a similar price.

As of June 30, Alto reported approximately $148 million in cash, cash equivalents, and restricted cash. With the new financing, the company expects to have sufficient funds to operate into 2028.

Analysts at Jefferies investment bank project that ALTO-207 could receive FDA approval by 2030, assuming positive trial results. They estimate that the drug could potentially generate over $1 billion in annual sales if it reaches the market.

Expanding Pipeline and Upcoming Data

Alto's pipeline extends beyond ALTO-207, with six other drugs currently in human testing. These include ALTO-100 for bipolar depression and ALTO-101 for cognitive impairment associated with schizophrenia. The company has recently updated its guidance on the ALTO-101 program, announcing that high-level data from a Phase 2 study is expected in the first quarter of next year.

The positive news surrounding ALTO-207 has significantly impacted Alto's stock performance. Shares, which closed at just over $6 on Friday, reached a peak of $12.19 on Monday—a level not seen since nearly a year ago, before a study of ALTO-100 delivered negative results.