Alto Neuroscience Inc. (ANRO:NYSE) caught the attention of BTIG, and Thomas Shrader initiated coverage on the biotech company with a Buy rating and a $27 per share ($27/share) target price, the analyst reported in a Nov. 17 research note.
"The story is rich in meaningful catalysts with four major readouts over the next two years, including three Phase 2b trials that each could be meaningful inflection points for the stock," Shrader wrote.
The analyst discussed what components make Alto Neuroscience an attractive investment opportunity.
Precision Psychiatry Differentiator
Alto uses a precision approach to developing next-generation drugs for psychiatry disorders, including treatment-resistant depression (TRD) and major depressive disorder (MDD). What this means is the biotech selects and uses biomarkers to define patient subgroups most likely to respond to the mechanism of action of each of its investigative drugs.
In choosing which biomarkers to employ, Alto starts with many possibilities then narrows them down to ones that truly are predictive of clinical results, not just relevant to a single batch of data. Also, the biomarkers must be applicable outside of academia.
"This precision approach should lead to a higher likelihood of clinical success during development and a more compelling final label for successful drugs," Shrader wrote.
The company works to ensure its clinical trials are carried out at the highest level, to prevent site level inconsistencies like poor drug compliance and misdiagnoses.
"We see this combined model of finding patients likely to have the largest treatment effects and running trials with the lowest chance for noise as the frontier of the field," Shrader wrote.
Combo Drug for Treatment-Resistant Depression
In May 2025, Alto acquired a combination drug it renamed ALTO-207 and, according to Shrader, interest in the biotech has risen since. ALTO-207 contains Pramipexole, a dopamine D3-preferring D3/D2 agonist, known for its antidepressant effect, and Ondansetron, an antiemetic to address Pramipexole's known side effect of nausea. Alto is advancing ALTO-207 in TRD, and the chosen biomarker is a low dopamine level.
"The approach, as validated by COBENIFY, makes sense as the combination can now be titrated to effective doses five times faster and to higher levels to produce greatly improved safety but also more compelling treatment effects," wrote Shrader.
Alto intends to launch a Phase 2b trial of ALTO-207 in TRD in mid-2026 then initiate and concurrently run a Phase 3 trial in 2027. The U.S. Food and Drug Administration has approved this path forward.
Lead Program in Major Depressive Disorder
Alto is advancing its lead program ALTO-300, a drug approved in the European Union called agomelatine and having a favorable safety profile, as a potential treatment for MDD. ALTO-300 combines melatonin receptor stimulation with established 5-HT2C agonism, triggering the release of dopamine. Enrollment for a Phase 2b study is underway, with patients being chosen based on the biomarker of dopamine activity.
"The idea is to improve dopamine activity, a key deficiency in MDD and TRD patients, that drives anhedonia, while also resynchronizing the disrupted circadian rhythms in depressed patients," Shrader explained.
The Phase 2b study are expected to be released in mid-2026, "the biggest catalyst for the stock," noted the analyst.
Additional Data Due Out in 2026
Shrader pointed out that Alto has two other clinical trial readouts in the near future, for investigative drugs with "very broad applicability."
One is ALTO-101, a PDE4 inhibitor designed to boost correctly regulated neural signaling in the central nervous system, which Alto is advancing as a treatment for cognitive impairment associated with schizophrenia, or CIAS. Phase 2 results are expected in Q1/26.
The other data readout is for ALTO-100 in a Phase 2b study in bipolar depression, or BPD. It is slated for H2/26. This small molecule that enhances neuroplasticity could be applicable throughout psychiatry.
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