Alto Neuroscience’s depression treatment failed to beat placebo just nine months after the biotech went public. The stunning failure called to mind Acelyrin, which faced a similar fate last year.
Alto Neuroscience’s Phase IIb therapy has failed to improve symptoms of major depressive disorder compared to placebo, sending the biotech’s shares down 60% in after-market trading Tuesday evening.
The clinical failure comes nine months after Alto became one of the earliest biotechs of 2024 to IPO, raising $128.6 million in early February. The stunning failure of ALTO-100 brings back echoes of Acelyrin last year; it was one of the few biotechs to test the IPO waters in 2023, raising a massive $540 million, only to fail a clinical trial a few months later.
Alto revealed the failure in an after-market release Tuesday evening. ALTO-100 did not beat placebo in the Phase IIb trial of patients with MDD, however safety and tolerability were as expected. Alto will now conduct a full analysis of the data set to determine next steps.
“We are disheartened by the results from this study as the unmet need in this patient population is immense,” said Alto CEO Amit Etkin in a statement.
William Blair analysts called the results “a clear miss” for Alto, pointing out that the study was well conducted and the placebo performed according to historical precedent. Stifel similarly said the drug “simply didn’t succeed.”
“The press release is light on data details but quite firm in that the trial was a failure, and there (commendably) isn’t any data dredging or overreaching post-hoc analyses in an attempt to salvage the asset,” Stifel noted in a note Tuesday evening.
Platform in Question
The treatment was developed with Alto’s precision psychiatry platform, which has been touted as a way to develop highly personalized and effective psychiatry therapies. Analysts from Jefferies, William Blair and Stifel wondered what the read-through would be for Alto’s deeper portfolio of neuropsychiatry treatments.
“The clear top-line miss of ALTO-100 in MDD undoubtedly will cast investor doubt on Alto’s Precision Neuropsychiatry approach to pair specific mechanisms of action to patient biomarkers of drug response,” William Blair’s team wrote.
Alto used a memory-based biomarker to sort patients before randomizing them into treatment and placebo arms. The main endpoint was a rating on the standard Montgomery-Åsberg Depression Rating Scale (MADRS) compared to placebo at the end of the six-week treatment period. The study was conducted in the U.S. with 301 adults.
Patients who were in the biomarker-defined group did not demonstrate a statistically significant improvement in depression symptoms compared to placebo. The treatment also did not spur improvement on other pre-specified key secondary endpoints.
“While the results are surprising and disappointing, I am proud of our team for conducting a first-of-its-kind precision biomarker-based study in psychiatry. We will move quickly to evaluate the full data set to better understand these findings and incorporate learnings from this large data set across our platform,” Etkin said.
ALTO-100 is also being studied in a Phase IIb trial of patients with bipolar disorder.
While Alto was taking an innovative approach, William Blair contends the biotech took on one of the toughest challenges: depression itself.
“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 firm wrote.
Sage Therapeutics is one recent example. While the company achieved FDA clearance for Zurzuvae in postpartum depression, the drug was not cleared in MDD because the FDA found the company had failed to provide “substantial evidence of effectiveness” to support approval.
Investors will now shift focus to Alto’s next pipeline asset, ALTO-300, which is also in development for MDD with a readout expected in the first half of 2025. The drug, also known as agomelatine, is approved in Europe and Australia for depression.
Alto has already completed a Phase IIa study verifying the EEG-based biomarker to be used. William Blair analysts suggested this asset is slightly more de-risked than ALTO-100, given its existing approvals elsewhere in the world.
“We still think the Alto precision psych approach has merit, and we do note that all drugs within the pipeline operate by fundamentally different mechanisms-of-action,” Stifel analysts wrote. “In our view, better patient selection, and ‘homogenizing’ trial populations, is still a winning strategy in CNS, and for this reason we do think Alto’s other shots-on-goal for fundamentally different assets should not be written off.”
Alto has plenty of cash to operate on despite the failure, Etkin said in the release. The company reported $193.6 million as of June 30, which will extend its cash runway into 2027 through multiple upcoming readouts. Besides the ALTO-300 readout next year, the company is also expecting one for ALTO-203, also in MDD.
Echoes of 2023
Alto’s failure calls to mind a similar stumble last year from Acelyrin, which raised a massive $540 million in an IPO to fuel its immunology aspirations. But just months later, it reported that lead asset izokibep had failed in a Phase IIb/III trial in patients with hidradenitis suppurativa. Acelyrin’s shares tumbled by more than half and sent a chill through the markets that had already been lukewarm to biotech public debuts.
Alto’s shares fell 60% to $5.70 in after-market trading Tuesday evening, compared to $14.53 at close just hours before. The company’s shares began trading on February 2 at $22 apiece.
Just like Alto, Acelyrin had another arrow in its quiver with izokibep, which later met the primary endpoint of a Phase IIb/III psoriatic arthritis trial. The therapy was also retested in hidradenitis suppurativa, meeting the main goal of a Phase III trial, the company reported in August.
Despite the success, Acelyrin has suspended investment in both indications for izokibep and will focus on thyroid eye disease therapy lonigutamab.
