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 strategy.
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.
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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. ALTO-100 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. A Phase 2b test of the drug in bipolar depression is expected to read out in 2026. In regulatory filings, the company said plans to advance the drug to Phase 2b/3 testing in post-traumatic stress disorder depend on success of the drug in the mid-stage 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.”
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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.
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