Alto Neuroscience hit a bum note in an early test of its precision neuropsychiatry model. A phase 2b trial of Alto’s lead drug candidate in depression missed its primary and key secondary endpoints, prompting investors to wipe 60% off the biotech’s share price.
California-based Alto went public in February, raising $147.9 million from investors who bought into the idea that the biotech can use brain-based biomarkers to identify patients who are more likely to respond to its drug candidates. The phase 2b trial of ALTO-100 in major depressive disorder (MDD) offered Alto a chance to validate its model and boost confidence in its ability to make neuropsychiatry R&D less risky.
Instead, the biotech reported a clean sweep of flops on the key endpoints. Investigators at 34 sites in the U.S. randomized 301 adults with MDD to receive ALTO-100, which is believed to work through BDNF signaling, or placebo.
After six weeks, the change in depressive symptoms, as measured on MADRS, was statistically no better in the ALTO-100 arm than the placebo group. That caused the trial to miss its primary endpoint. Alto said its candidate failed to beat placebo on key, pre-specified secondary endpoints. The biotech is reviewing the data before deciding on what, if any, next steps to take in MDD.
The available evidence is light on silver linings. In a note to investors, William Blair analysts said Alto management told them the placebo response, a cause of the downfall of other MDD programs, was within historical norms and the trial was well conducted. Those facts point to ALTO-100, rather than the trial, being the cause of the failure.
Investors wiped 60% off Alto’s share price in premarket trading, sending the stock down to $5.81. That drop may reflect both an assumption that ALTO-100 has no future in MDD and the potential readthrough to the rest of Alto’s pipeline. The biotech is working on drugs with various mechanisms but the programs are all underpinned by a platform designed to “disrupt the trial-and-error method” of psychiatry R&D.
William Blair analysts said the midphase flop “undoubtedly will cast investor doubt on Alto’s Precision Neuropsychiatry approach.” Alto remains confident, though, and the analysts are withholding judgment until they see data.
“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,” the analysts said. “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.”
Alto has opportunities to improve perceptions of its platform. A phase 2b study of ALTO-100 in bipolar depression is continuing, although management is yet to provide a rationale for the decision, and other candidates are in the clinic. Midphase data on ALTO-203, a histamine H3 receptor inverse agonist, and ALTO-300, which is approved as an antidepressant in Europe and Australia, in MDD are due in 2025.
Readouts for ALTO-100 in bipolar depression and the transdermal PDE4 inhibitor ALTO-101 in cognitive impairment associated with schizophrenia are also on the roadmap. Sitting on enough cash to fund itself into 2027, Alto has the money to deliver data on the programs.
Editor's Note: This story was updated at 03:30 a.m. ET on Oct. 24, 2024, to correct the mechanism of action of ALTO-100.