The share price of Alto Neuroscience more than doubled at one point Monday, after the psychiatry drug specialist announced plans to hasten the development of a potential depression medicine.
This medicine, code-named ALTO-207, combines a drug already used to treat Parkinson’s disease with the active ingredient in the nausea medication Zofran. Alto got ahold of ALTO-207 this spring, when, for less than $2 million, it bought a slate of experimental, dopamine-boosting drugs from Chase Therapeutics. In unveiling that deal, Alto said it intends to start, by the middle of next year, a mid-stage clinical trial that could serve as the foundation for ALTO-207 getting approved in treatment-resistant depression.
Now, encouraged by a recent meeting with the Food and Drug Administration, the company also wants to initiate a late-stage study by early 2027.
The “successful outcome” of that recent FDA meeting was a “critical step forward” for this program, Amit Etkin, Alto’s founder and CEO, said in a statement. “We believe we are well-positioned to advance ALTO-207 for the many patients who are not adequately served by current therapies.”
To help fund that larger experiment, Alto disclosed Monday a $50 million private placement financing. This so-called PIPE deal has Alto selling 3.8 million shares of common stock for just shy of $6 apiece. For nearly the same price, some investors can also nab pre-funded warrants to purchase up to an aggregate of 4.6 million shares of common stock.
Alto said it has enough money to operate into 2028. As of June 30, the company recorded around $148 million worth of cash, cash equivalents and restricted cash.
Analysts at the investment bank Jefferies estimate that Alto’s medicine could receive FDA approval by 2030, provided the company’s trials produce positive results. If ALTO-207 does reach the market, the analysts predict that it could eventually generate more than $1 billion in annual sales.
Alto has a half dozen other drugs in human testing, including ALTO-100 for bipolar depression and ALTO-101 for the cognitive impairment associated with schizophrenia. The company just offered up new guidance on the latter program, noting that high-level data from a Phase 2 study should arrive in the first three months of next year.
Alto shares, which ended Friday a little over $6 apiece, were trading at a peak of $12.19 on Monday. The last time they were that high was almost a year ago, before a study of ALTO-100 delivered negative results.
