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. The company's shares more than doubled following the news, reaching a peak of $12.19 on Monday, a level not seen since negative results from another drug study nearly a year ago.

Strategic Acquisition and Development Plans

Alto acquired ALTO-207 this spring as part of a $2 million deal with Chase Therapeutics, which included a slate of experimental, dopamine-boosting drugs. The company initially planned to begin a mid-stage clinical trial by mid-2026, potentially laying the groundwork for approval in treatment-resistant depression.

Following a successful meeting with the Food and Drug Administration (FDA), Alto has now accelerated its timeline. The company aims to initiate a late-stage study by early 2027, marking what CEO Amit Etkin called a "critical step forward" for the program.

Financial Boost and Market Potential

To fund the accelerated development, Alto has secured a $50 million private placement financing. The deal involves selling 3.8 million shares of common stock at just under $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.

Analysts at Jefferies investment bank project that ALTO-207 could receive FDA approval by 2030, contingent on positive trial results. If successful, the drug is estimated to potentially generate over $1 billion in annual sales.

Pipeline Progress and Future Outlook

Alto's pipeline includes several other drugs in human testing, such as ALTO-100 for bipolar depression and ALTO-101 for cognitive impairment associated with schizophrenia. The company expects to release high-level data from a Phase 2 study of ALTO-101 in the first quarter of next year.

With its current financial position, including approximately $148 million in cash and equivalents as of June 30, Alto reports having sufficient funds to operate into 2028. This extended runway, coupled with the accelerated development of ALTO-207, positions the company for potential growth in the coming years in the competitive landscape of psychiatric drug development.