Alto Neuroscience Inc
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
ANRO$25.16+15.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001999480-24-000022
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001999480-24-000035
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 148 current paragraphs.
93 unchanged; 28 reworded; 20 added; 9 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
On June 18, 2024, we held a Type C meeting with the U.S. Food and Drug Administration, or FDA, in which we reviewed the development of ALTO-100, including all prior Phase 2a data which drove the selection of the memory biomarker, and our overall biomarker approach to patient enrichment. We believe the meeting was successful in that we received feedback on the development path of ALTO-100 in MDD leveraging our enrichment biomarker. Based on the FDA feedback, we expect the data from the ongoing Phase 2b study to inform the enriched population to be studied in potential registration-supportive trials. Further, in the meeting we provided the mechanistic and biological link between the biomarker and the enriched population, and we believe this provided the FDA with further clarity on the rationale for our memory-based patient selection approach.
Current report
We have also initiated a 200-patient Phase 2b clinical trial evaluating ALTO-100 in bipolar depression with a funding award in the form of a convertible loan agreement, or the Grant Agreement, with The Wellcome Trust Limited, or Wellcome (See “—Liquidity and Capital Resources”). Importantly, under the terms of the Grant Agreement, Wellcome cannot convert any of the funded amount to shares of our common stock any earlier than the second anniversary of the Grant Agreement, other than in connection with an event of default or a company sale as specified in the Grant Agreement. We expect to report topline data from this trial in 2026.
Current report
Research and development expenses were $13.2 million for the three months ended June 30, 2024, compared to $7.1 million for the three months ended June 30, 2023. The increase of $6.1 million was primarily due to the following:
Current report
•an increase of approximately $1.7 million related to our ongoing ALTO-100 and ALTO-300 Phase 2b clinical trials, which began in 2023, and an increase of $0.8 million related to our ALTO-203 Phase 2 POC clinical trial, which began in 2024;
Current report
•an increase of approximately $2.0 million related to development milestones achieved under licensing agreements covering ALTO-101 and ALTO-203; and
Current report
•an increase of approximately $1.0 million in salary and personnel related costs.
Current report
General and administrative expenses were $5.2 million for the three months ended June 30, 2024, compared to $2.1 million for the three months ended June 30, 2023. The increase of $3.1 million was primarily due to the following:
Current report
•an increase of approximately $1.4 million in salary and personnel-related costs, which includes $0.6 million of non-cash stock-based compensation; and
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
Research and development expenses were $23.1 million for the six months ended June 30, 2024, compared to $12.7 million for the six months ended June 30, 2023. The increase of $10.5 million was primarily due to the following:
Current report
•an increase of approximately $2.0 million related to development milestones achieved under licensing agreements covering ALTO-101 and ALTO-203; and
Current report
General and administrative expenses were $9.6 million for the six months ended June 30, 2024, compared to $3.6 million for the six months ended June 30, 2023. The increase of $5.9 million was primarily due to the following:
Current report
•an increase of approximately $3.1 million in salary and personnel-related costs, which includes $1.8 million of non-cash stock-based compensation; and
Current report
Grant Agreement
Current report
In July 2024, we entered into the Grant Agreement with Wellcome. The Grant Agreement provides for an unsecured convertible loan, or the Convertible Loan, from Wellcome of up to approximately $11.7 million, payable in six tranches, $2.0 million of which is being funded upon the execution of the Grant Agreement, and the remainder of which will be funded upon the completion of certain milestones as set forth in the Grant Agreement, subject to certain conditions described therein. Proceeds from the Convertible Loan may be used by the Company solely to advance development of ALTO-100 in bipolar depression. Outstanding amounts under the Convertible Loan accrue interest at an annual rate equal to the Sterling Overnight Index Rate plus 2%, subject to potential adjustment if such interest rate equals or exceeds 9% at any time. At any time after the second anniversary of the effective date of the Grant Agreement or in connection with an event of default, Wellcome has the right, at its election, to convert some or all of the Convertible Loan into shares of our common stock at a price per share equal to a 20% discount to the thirty-day volume-weighted average price of Common Stock on the New York Stock Exchange at the date of such conversion. The Grant Agreement provides that in no event shall the aggregate number of shares of our common stock issued pursuant to conversion of the Convertible Loan exceed 5,363,326, which is equal to 19.9% of the number of shares of our common stock outstanding as of the date of the Grant Agreement. At any time after the fifth anniversary of the date of the Grant Agreement or in connection with an event of default, Wellcome may require repayment of the Convertible Loan in full, together with accrued interest, to the extent not converted as described above.
Current report
◦increased non-cash expenses including stock-based compensation expenses which increased by $2.3 million to $4.1 million for the six months ended June 30, 2024, compared to $1.7 million for the six months ended June 30, 2023 and $0.7 million of non-cash expense in the six months ended June 30, 2024 related to the achievement of a milestone related to a license agreement which was settled, in part, through the issuance of shares of our common stock.
Current report
◦increased accrued expenses and other liabilities of $2.0 million in the six months ended June 30, 2024 compared to a decrease in accrued expenses and other liabilities of $1.1 million in the six months ended June 30, 2023.
Current report
In July 2024, we entered into the Grant Agreement with Wellcome. The Grant Agreement provides for the Convertible Loan from Wellcome of up to approximately $11.7 million, payable in six tranches, $2.0 million of which is being funded upon the execution of the Grant Agreement, and the remainder of which will be funded upon the completion of certain milestones as set forth in the Grant Agreement, subject to certain conditions described therein. For additional information regarding the Grant Agreement, see Note 13 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current report
In April 2024, we achieved a clinical milestone under the Teva Agreement related to the initiation of our Phase 2 POC trial evaluating ALTO-203 and paid Teva $0.5 million in cash during the three months ended June 30, 2024. For a detailed description of this milestone payment, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current report
In April 2024 we achieved a milestone under the MedRx Agreement and paid MedRx $0.75 million in cash and issued 46,875 shares of our common stock, recognizing expense of $1.5 million during the three months ended June 30, 2024. For a detailed description of this milestone payment, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Removed paragraphs (9)
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
Previous report
Other Income (Expense)
Previous report
Research and Development Expenses
Previous report
Research and development expenses were $10.0 million for the three months ended March 31, 2024, compared to $5.6 million for the three months ended March 31, 2023. The increase of $4.3 million was primarily due the following:
Previous report
General and Administrative Expenses
Previous report
General and administrative expenses were $4.4 million for the three months ended March 31, 2024, compared to $1.6 million for the three months ended March 31, 2023. The increase of $2.8 million was primarily due to the following:
Previous report
•a $1.7 million increase in salary and personnel-related costs, which includes $1.2 million of non-cash stock-based compensation; and
Previous report
Other Income (Expense)
Reworded paragraphs (28)
Previous wording
We have successfully completed Phase 2a trials for our two most advanced product candidates, ALTO-100 and ALTO-300, in more than 200 patients each. In each of these trials, we identified patient populations who demonstrated greater response based on objectively defined biomarker profiles, and then prospectively replicated these biomarker findings in independent datasets from within the same trial. Based on these biomarker findings we initiated a placebo-controlled, double-blind, randomized Phase 2b trial for each candidate in patients with MDD characterized by an objective biomarker. Specifically, in the ALTO-100 Phase 2b trial we are targeting enrollment of 266 patients with MDD characterized by a cognitive biomarker, and we expect to report topline data from this trial in the second half of 2024; and in the ALTO-300 Phase 2b trial we are targeting enrollment of 200 patients with MDD characterized by an EEG biomarker, and we expect to report topline data from this trial in the first half of 2025. We estimate one or both of these two independent biomarkers are present in approximately three-quarters of the overall MDD population. We plan to review the development of ALTO-100 and our biomarker approach with the U.S. Food and Drug Administration, or FDA, in a Type C meeting on June 18, 2024.
Current wording
We have successfully completed Phase 2a trials for our two most advanced product candidates, ALTO-100 and ALTO-300, in more than 200 patients each. In each of these trials, we identified patient populations who demonstrated greater response based on objectively defined biomarker profiles, and then prospectively replicated these biomarker findings in independent datasets from within the same trial. Based on these biomarker findings we initiated a placebo-controlled, double-blind, randomized Phase 2b trial for each candidate in patients with MDD characterized by an objective biomarker. Specifically, in the ALTO-100 Phase 2b trial we recently completed enrollment in the study which enrolled 301 adult patients with MDD characterized by a cognitive biomarker. We expect to report topline data from this trial in October 2024.
Previous wording
In addition to our two most advanced programs, we recently initiated a proof-of-concept, or POC, trial evaluating ALTO-203, a novel histamine H3 receptor inverse agonist, in patients with MDD and higher levels of anhedonia, or the lack of motivation or pleasure. The Phase 2 POC trial is targeting enrollment of 60 patients and we expect to report topline data from this trial in the first half of 2025. We are also developing ALTO-101, a novel PDE4 inhibitor for patients with cognitive impairment associated with schizophrenia, or CIAS. In April 2024 we reported positive Phase 1 data from a healthy volunteer trial evaluating a proprietary transdermal formulation of ALTO-101. In the trial, transdermal delivery of ALTO-101 resulted in significantly higher drug exposure in plasma and a more favorable tolerability profile than that observed with oral administration of ALTO-101. We plan to initiate a Phase 2 POC trial evaluating ALTO-101 in patients with CIAS in the first half of 2024. We also plan to develop ALTO-202, our novel, oral N-methyl-D-aspartate, or NMDA, receptor antagonist, for the treatment of patients with MDD.
Current wording
In addition to our two most advanced programs, we recently initiated a Phase 2 proof-of-concept, or POC, trial evaluating ALTO-203, a novel histamine H3 receptor inverse agonist, in patients with MDD and higher levels of anhedonia, or the lack of motivation or pleasure. We expect to report topline data from this trial in the first half of 2025. We are also developing ALTO-101, a novel PDE4 inhibitor for patients with cognitive impairment associated with schizophrenia, or CIAS. In April 2024 we reported positive Phase 1 data from a healthy volunteer trial evaluating a proprietary transdermal formulation of ALTO-101. In the trial, transdermal delivery of ALTO-101 resulted in significantly higher drug exposure in plasma and a more favorable tolerability profile than that observed with oral administration of ALTO-101. We recently initiated a Phase 2 POC trial evaluating ALTO-101 in patients with CIAS. We expect to report topline data from this trial in the second half of 2025. We also plan to develop ALTO-202, our novel, oral N-methyl-D-aspartate, or NMDA, receptor antagonist, for the treatment of patients with MDD.
Previous wording
Since our inception in 2019, we have devoted substantially all of our resources to the research and development of our product candidates by conducting clinical trials and preclinical studies, building our Precision Psychiatry Platform, and recruiting management and technical staff to support these operations. To date, we have funded our operations primarily through the aggregate net proceeds of approximately$275.6 million from equity financings (including from our initial public offering, or IPO, and pre-IPO sales of our convertible preferred stock) and borrowings under our loan and security agreement.
Current wording
Since our inception in 2019, we have devoted substantially all of our resources to the research and development of our product candidates by conducting clinical trials and preclinical studies, building our Platform, and recruiting management and technical staff to support these operations. To date, we have funded our operations primarily through the aggregate net proceeds of approximately$275.6 million from equity financings (including from our initial public offering, or IPO, and pre-IPO sales of our convertible preferred stock) and borrowings under our loan and security agreement.
Previous wording
We have not generated any revenue from product sales and we have incurred recur ring losses since our inception. Our net losses were $13.4 million and $7.3 million for the three months ended March 31, 2024 and 2023, respec tively. As of March 31, 2024, we had an accumulated deficit of$90.4 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. We anticipate that our operating expenses and capital expenditures will increase substantially with our ongoing activities, particularly as we:
Current wording
We have not generated any revenue from product sales and we have incurred recurring losses since our inception. Our net losses were $16.0 million and $29.4 million for the three and six months ended June 30, 2024, respectively. Our net losses were $8.7 million and $15.9 million for the three and six months ended June 30, 2023. As of June 30, 2024, we had an accumulated deficit of $106.4 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. We anticipate that our operating expenses and capital expenditures will increase substantially with our ongoing activities, particularly as we:
Previous wording
•continue to progress the clinical development of our product candidates, including ALTO-100 and ALTO-300 in ongoing Phase 2b clinical trials, ALTO-203 in an ongoing proof-of-concept trial, and ALTO-101 through a planned proof-of-concept trial;
Current wording
•continue to progress the clinical development of our product candidates, including ALTO-100 and ALTO-300 in ongoing Phase 2b clinical trials, and ALTO-203 and ALTO-101 in ongoing Phase 2 POC trials;
Previous wording
As of March 31, 2024, we had cash and cash equivalents of$205.9 million. During the three months ended March 31, 2024, we raised net proceeds of approximately$132.9 million through our IPO. We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. See “—Liquidity and Capital Resources.”
Current wording
As of June 30, 2024, we had cash, cash equivalents and restricted cash of$193.6 million. In February 2024, we raised net proceeds of approximately$133.0 million through our IPO. We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. See “—Liquidity and Capital Resources.”
Previous wording
We expect that our general and administrative expenses will increase in the future as we expand our headcount to support our continued research and development of our product candidates. We also expect to incur increased expenses associated with operating as a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services, costs related to compliance with the rules and regulations of the SEC and listing standards applicable to companies listed on a national securities exchange, director and officer insurance costs, and investor relations costs. In addition, if we obtain regulatory approval for any of our product candidates and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing, and distribution activities.
Current wording
We expect that our general and administrative expenses will increase in the future as we expand our headcount to support our continued research and development of our product candidates. We also expect to incur increased expenses associated with operating as a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services, costs related to compliance with the rules and regulations of the Securities and Exchange Commission, or SEC, and listing standards applicable to companies listed on a national securities exchange, director and officer insurance costs, and investor relations costs. In addition, if we obtain regulatory approval for any of our product candidates and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing, and distribution activities.
Previous wording
Other income (expense) consists primarily of interest income on our cash and cash equivalents, interest expense on borrowings under our loan and security agreement, and non-cash changes in the fair value of our outstanding preferred stock warrant liability. During the three months ended March 31, 2024, in connection with the IPO, the Series A Preferred Stock Warrants were net exercised and settled in common stock and the K2 Warrant was converted into a common stock warrant (see Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report); as a result, both of these warrants are treated as equity instruments prospectively. Therefore, there will be no incremental changes to the fair value of preferred stock warrants in future periods.
Current wording
Other income (expense) consists primarily of interest income on our cash and cash equivalents, interest expense on borrowings under our loan and security agreement, and non-cash changes in the fair value of our outstanding preferred stock warrant liability. During the three months ended March 31, 2024, in connection with the IPO, the Series A Preferred Stock Warrants were net exercised and settled in common stock and the K2 Warrant was converted into a common stock warrant (see Note 9 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report); as a result, both of these warrants are treated as equity instruments prospectively. Therefore, there will be no incremental changes to the fair value of the warrants in future periods.
Previous wording
•a $0.9 million increase primarily in professional fees related to being a publicly traded company.
Current wording
•an increase of approximately $0.9 million in professional fees related to being a publicly traded company.
Previous wording
Other income, net increased $1.1 million in the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to an increase in interest income of $1.3 million related to higher interest earned on our money market funds due to larger cash balances invested, offset by $0.2 million of expense related to the change in fair value of the K2 Warrant that was remeasured immediately prior to its conversion to a common stock warrant, which occurred at the time of the IPO.
Current wording
Other income, net increased $1.8 million in the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to an increase in interest income of $2.0 million related to higher interest earned on our money market funds due to larger cash balances invested, offset by a $0.1 million decrease related to the prior year increase in the fair value of our warrant liability.
Previous wording
The following table summarizes our results of operations for thethree months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table summarizes our results of operations for thesix months ended June 30, 2024 and 2023 (in thousands):
Previous wording
•an increase of approximately $1.4 million related to our ongoing ALTO-100 and ALTO-300 Phase 2b clinical trials, which began in 2023; and
Current wording
•an increase of approximately $3.1 million related to our ongoing ALTO-100 and ALTO-300 Phase 2b clinical trials, which began in 2023, and an increase of $1.4 million related to our ALTO-203 Phase 2 POC clinical trial, which began in 2024;
Previous wording
•an increase of $1.6 million in salary and personnel related costs, which includes $0.5 million of non-cash stock based compensation.
Current wording
•an increase of approximately $2.6 million in salary and personnel related costs, which includes $0.5 million of non-cash stock-based compensation.
Previous wording
As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $205.9 million and $82.5 million, respectively.
Current wording
As of June 30, 2024 and December 31, 2023, we had cash, cash equivalents and restricted cash of $193.6 million and $82.5 million, respectively.
Previous wording
In December 2022, we entered into the Loan Agreement with the Lender, K2 HealthVentures LLC, as administrative agent for the Lender, and Ankura Trust Company, LLC, as collateral agent for the Lender. The Loan Agreement provides for up to an aggregate principal amount of $35.0 million in term loans, which we refer to collectively as the Term Loan, consisting of a first tranche term loan of $10.0 million, two subsequent tranches of term loans of $7.5 million each to be funded upon the achievement of certain time-based, clinical milestones, and an additional uncommitted tranche term loan of up to $10.0 million, or the Fourth Tranche. We drew $10.0 million upon entry into the Loan Agreement and, as of December 31, 2023, we had an outstanding principal balance of $10.0 million under the Term Loan. Based upon the terms of the Loan Agreement we could potentially access up to $10.0 million of the remaining $25.0 million of the credit facility.
Current wording
In December 2022, we entered into the Loan Agreement with the Lender, K2 HealthVentures LLC, as administrative agent for the Lender, and Ankura Trust Company, LLC, as collateral agent for the Lender. The Loan Agreement provides for up to an aggregate principal amount of $35.0 million in term loans, which we refer to collectively as the Term Loan, consisting of a first tranche term loan of $10.0 million, two subsequent tranches of term loans of $7.5 million each to be funded upon the achievement of certain time-based, clinical milestones, and an additional uncommitted tranche term loan of up to $10.0 million, or the Fourth Tranche. We drew $10.0 million upon entry into the Loan Agreement and, as of June 30, 2024 and December 31, 2023, we had an outstanding principal balance of $10.0 million under the Term Loan. Based upon the terms of the Loan Agreement we could potentially access up to $10.0 million of the remaining $25.0 million of the credit facility.
Previous wording
Net cash used in operating activities was$11.0 million for thethree months ended March 31, 2024, as compared to$7.5 million for thethree months ended March 31, 2023. The increase in cash used was primarily the result of the increase in net loss of $6.1 million, primarily attributable to our increased spending on research and development expenses. The increase in net loss was offset by increased non-cash stock based compensation expenses which increased by $1.7 million to $2.2 million for the three months ended March 31, 2024, compared to $0.5 million for the three months ended March 31, 2023. The increase in net loss in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was also offset by an increase in accounts payable of $1.1 million in three months ended March 31, 2024 compared to a decrease in accounts payable of $0.6 million in three months ended March 31, 2023. In addition, cash flow used in operations increased due to an increase in prepaid assets related to prepaid insurance.
Current wording
Net cash used in operating activities was$22.7 million for thesix months ended June 30, 2024, as compared to$14.2 million for thesix months ended June 30, 2023. The increase in cash used was primarily the result of the increase in net loss of $13.5 million, primarily attributable to our increased spending on research and development expenses. Additional changes in operating cash flow were driven by:
Previous wording
Net cash used in investing activities was$0.2 million for thethree months ended March 31, 2024, for corporate and clinical trial related capital expenditures, specifically EEG machines utilized in our clinical trials. The net cash used in investing activities for thethree months ended March 31, 2023 was not material.
Current wording
Net cash used in investing activities was$0.6 million for thesix months ended June 30, 2024, for corporate and clinical trial related capital expenditures, specifically EEG machines utilized in our clinical trials. The net cash used in investing activities for thesix months ended June 30, 2023 was negligible.
Previous wording
Net cash provided by financing activities was$134.6 million for thethree months ended March 31, 2024 primarily related to the issuance of 9,246,000 shares of common stock in our IPO at aprice to the public of $16.00 per share, offset by $2.9 million of other offering expenses paid during the three months ended March 31, 2024.
Current wording
Net cash provided by financing activities was$134.3 million for thesix months ended June 30, 2024 primarily related to the issuance of 9,246,000 shares of common stock in our IPO at aprice to the public of $16.00 per share, offset by $3.2 million of other offering expenses related to our IPO that were paid during the six months ended June 30, 2024.
Previous wording
Net cash provided by financing activities was$25.0 million for thethree months ended March 31, 2023, related to the issuance of Series B convertible preferred stock.
Current wording
Net cash provided by financing activities was$24.9 million for thesix months ended June 30, 2023, primarily related to the issuance of Series B convertible preferred stock.
Previous wording
We believe that our existing cash and cash equivalents of $205.9 million will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could expend our capital resources sooner than we currently expect.
Current wording
We believe that our existing cash and cash equivalents of $193.1 million will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could expend our capital resources sooner than we currently expect.
Previous wording
In addition, we enter into agreements in the normal course of business with clinical trial sites, CROs, CMOs, and other vendors for research and development services. Such agreements generally provide for termination upon limited written notice. These payments are therefore not included in our contractual obligations discussion above. For additional information regarding our contractual obligations and commitments, see Note 10 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current wording
In addition, we enter into agreements in the normal course of business with clinical trial sites, CROs, CMOs, and other vendors for research and development services. Such agreements generally provide for termination upon limited written notice. These payments are therefore not included in our contractual obligations discussion above. For additional information regarding our contractual obligations and commitments, see Note 11 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Previous wording
In December 2019, we entered into an exclusive license agreement with equity, or the Stanford Agreement, with the Board of Trustees of the Leland Stanford Junior University, or Stanford, which was subsequently amended in May 2020 and December 2023. Under the terms of the Stanford Agreement, we obtained a worldwide, royalty-bearing license, with the right to sublicense during the exclusive term only, under certain patent rights in five patent families relating to brain stimulation, electroencephalogram and functional MRI that we could use to guide treatment of psychiatry patients, or the Stanford Licensed Patents, and under certain technology relating to the inventions covered by the Stanford Licensed Patents, or the Stanford Licensed Technology, to make, have made, use, import, offer for sale and sell licensed products for use in any indication. For a detailed description of the financial terms of the Stanford Agreement, see Note 5 to the Condensed Consolidated Financial Statements. For additional information on the terms of the Stanford Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
In December 2019, we entered into an exclusive license agreement with equity, or the Stanford Agreement, with the Board of Trustees of the Leland Stanford Junior University, or Stanford, which was subsequently amended in May 2020 and December 2023. Under the terms of the Stanford Agreement, we obtained a worldwide, royalty-bearing license, with the right to sublicense during the exclusive term only, under certain patent rights in five patent families relating to brain stimulation, electroencephalogram and functional MRI that we could use to guide treatment of psychiatry patients, or the Stanford Licensed Patents, and under certain technology relating to the inventions covered by the Stanford Licensed Patents, or the Stanford Licensed Technology, to make, have made, use, import, offer for sale and sell licensed products for use in any indication. For a detailed description of the financial terms of the Stanford Agreement, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. For additional information on the terms of the Stanford Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
In May 2021, we entered into a license agreement, or the Sanofi Agreement, with Sanofi, pursuant to which we obtained an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under certain patent rights and know-how of Sanofi relating to a PDE4 inhibitor compound, now known as ALTO-101, to use, have used, develop, have developed, manufacture, have manufactured, commercialize, have commercialized or otherwise exploit ALTO-101 and products incorporating ALTO-101, or the Sanofi Licensed Products, for all human therapeutic, prophylactic and diagnostic uses. We also obtained a non-exclusive, worldwide license to use certain other specified know-how licensed to Sanofi by a specified third party to exploit Sanofi Licensed Products solely with respect to Parkinson’s disease. For a detailed description of the financial terms of the Sanofi Agreement, see Note 5 to the Condensed Consolidated Financial Statements. For additional information on the terms of the Sanofi Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
In May 2021, we entered into a license agreement, or the Sanofi Agreement, with Sanofi, pursuant to which we obtained an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under certain patent rights and know-how of Sanofi relating to a PDE4 inhibitor compound, now known as ALTO-101, to use, have used, develop, have developed, manufacture, have manufactured, commercialize, have commercialized or otherwise exploit ALTO-101 and products incorporating ALTO-101, or the Sanofi Licensed Products, for all human therapeutic, prophylactic and diagnostic uses. We also obtained a non-exclusive, worldwide license to use certain other specified know-how licensed to Sanofi by a specified third party to exploit Sanofi Licensed Products solely with respect to Parkinson’s disease. For a detailed description of the financial terms of the Sanofi Agreement, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. For additional information on the terms of the Sanofi Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
In May 2021, we entered into a patent and know-how license agreement, or the Cerecor Agreement, with Cerecor Inc. (n/k/a Avalo Therapeutics, Inc.), or Cerecor, pursuant to which we obtained an exclusive worldwide, royalty-bearing license, with the right to sublicense, under certain patent rights and know-how owned or controlled by Cerecor relating to an NR2B inhibitor compound now known as ALTO-202, including certain rights licensed to Cerecor by Essex Chemie AG, or Merck, to research, develop, make, have made, use, import, offer for sale and sell ALTO-202 and products incorporating ALTO-202, or Cerecor Licensed Products, for the prevention, diagnosis and/or treatment of all diseases in humans. For a detailed description of the financial terms of the Cerecor Agreement, see Note 5 to the Condensed Consolidated Financial Statements. For additional information on the terms of the Cerecor Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023
Current wording
In May 2021, we entered into a patent and know-how license agreement, or the Cerecor Agreement, with Cerecor Inc. (n/k/a Avalo Therapeutics, Inc.), or Cerecor, pursuant to which we obtained an exclusive worldwide, royalty-bearing license, with the right to sublicense, under certain patent rights and know-how owned or controlled by Cerecor relating to an NR2B inhibitor compound now known as ALTO-202, including certain rights licensed to Cerecor by Essex Chemie AG, or Merck, to research, develop, make, have made, use, import, offer for sale and sell ALTO-202 and products incorporating ALTO-202, or Cerecor Licensed Products, for the prevention, diagnosis and/or treatment of all diseases in humans. For a detailed description of the financial terms of the Cerecor Agreement, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. For additional information on the terms of the Cerecor Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023
Previous wording
In October 2021, we entered into an asset purchase agreement, or the Teva Agreement, with Teva Pharmaceutical Industries, Ltd. and its affiliate Cephalon, Inc., or together Teva, pursuant to which we acquired patents, know-how and other rights to ALTO-203 and a specified related compound, or Teva Acquired Compounds, and we assumed all post-acquisition liabilities related thereto For a detailed description of the financial terms of the Teva Agreement, see Note 5 to the Condensed Consolidated Financial Statements. For additional information on the terms of the Teva Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
In October 2021, we entered into an asset purchase agreement, or the Teva Agreement, with Teva Pharmaceutical Industries, Ltd. and its affiliate Cephalon, Inc., or together Teva, pursuant to which we acquired patents, know-how and other rights to ALTO-203 and a specified related compound, or Teva Acquired Compounds, and we assumed all post-acquisition liabilities related thereto For a detailed description of the financial terms of the Teva Agreement, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. For additional information on the terms of the Teva Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
In October 2021, we entered into an asset transfer agreement, or the Palisade Agreement, with Palisade Bio, Inc., or Palisade, pursuant to which we acquired all patent, know-how and other rights to ALTO-100. Palisade also transferred and assigned to us all right, title, and interest in, to, and under that certain exclusive license agreement, or the Dow Agreement, between Dow Agrosciences LLC, or Dow, and Palisade (f/k/a Neuralstem, Inc.), dated as of December 1, 2016, pursuant to which we licensed patent rights covering an intermediate compound in the manufacturing process for ALTO-100. For a detailed description of the financial terms of the Palisade Agreement, see Note 5 to the Condensed Consolidated Financial Statements. For additional information on the terms of the Palisade Agreement and the related License Agreement with Dow Agrosciences LLC, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
In October 2021, we entered into an asset transfer agreement, or the Palisade Agreement, with Palisade Bio, Inc., or Palisade, pursuant to which we acquired all patent, know-how and other rights to ALTO-100. Palisade also transferred and assigned to us all right, title, and interest in, to, and under that certain exclusive license agreement, or the Dow Agreement, between Dow Agrosciences LLC, or Dow, and Palisade (f/k/a Neuralstem, Inc.), dated as of December 1, 2016, pursuant to which we licensed patent rights covering an intermediate compound in the manufacturing process for ALTO-100. For a detailed description of the financial terms of the Palisade Agreement, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. For additional information on the terms of the Palisade Agreement and the related License Agreement with Dow Agrosciences LLC, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
In September 2023, we entered into a joint development and license agreement, or the MedRx Agreement, with MedRx Co., Ltd., or MedRx, pursuant to which we obtained an exclusive, sublicensable, worldwide license, with the right to sublicense, under certain patent rights and know-how of MedRx relating to transdermal drug delivery to develop (excluding any pre-clinical development), manufacture, and commercialize transdermally delivered pharmaceutical products comprising MedRx’s transdermal patch technology and our ALTO-101, or MedRx Licensed Product, for all therapeutic, prophylactic, and diagnostic uses. We granted MedRx an exclusive, sublicensable, worldwide license under certain patent rights and know-how relating to ALTO-101 owned or controlled by us, including certain patents and know how licensed to us pursuant to the Sanofi Agreement, solely to conduct pre-clinical development and manufacturing of the MedRx Licensed Products for us in accordance with the MedRx Agreement and a separate manufacturing and supply agreement to be entered into between us and MedRx. For a detailed description of the financial terms of the MedRx Agreement, see Note 5 to the Condensed Consolidated Financial Statements. For additional information on the terms of the MedRx Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
In September 2023, we entered into a joint development and license agreement, or the MedRx Agreement, with MedRx Co., Ltd., or MedRx, pursuant to which we obtained an exclusive, sublicensable, worldwide license, with the right to sublicense, under certain patent rights and know-how of MedRx relating to transdermal drug delivery to develop (excluding any pre-clinical development), manufacture, and commercialize transdermally delivered pharmaceutical products comprising MedRx’s transdermal patch technology and our ALTO-101, or MedRx Licensed Product, for all therapeutic, prophylactic, and diagnostic uses. We granted MedRx an exclusive, sublicensable, worldwide license under certain patent rights and know-how relating to ALTO-101 owned or controlled by us, including certain patents and know how licensed to us pursuant to the Sanofi Agreement, solely to conduct pre-clinical development and manufacturing of the MedRx Licensed Products for us in accordance with the MedRx Agreement and a separate manufacturing and supply agreement to be entered into between us and MedRx. For a detailed description of the financial terms of the MedRx Agreement, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. For additional information on the terms of the MedRx Agreement, see the section titled “Business— License and Other Agreements” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
In April 2024 we achieved a milestone under the MedRx Agreement and will pay MedRx $0.75 million in cash and issue 46,875 shares of our common stock during the three months ended June 30, 2024, see discussion in Note 12 to our condensed consolidated financial statements included elsewhere in this Quarterly Report. Other than the milestone under the MedRx Agreement, we could not estimate when milestones, royalties, and/or other payments due to third parties under our existing license agreements will be due, and none of these events were probable to occur as of March 31, 2024.
Current wording
Other than the milestones achieved under the Teva Agreement and the MedRx Agreement, we could not estimate when milestones, royalties, and/or other payments due to third parties under our existing license agreements will be due, and none of these events were probable to occur as of June 30, 2024.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
In the ALTO-300 Phase 2b trial we are targeting enrollment of 200 patients with MDD characterized by an EEG biomarker, and we expect to report topline data from this trial in the first half of 2025. We estimate one or both of these two independent biomarkers being used for patient selection for ALTO-100 and ALTO-300 are present in approximately three-quarters of the overall MDD population.
Current report — wording carried from elsewhere
The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):
Current report — wording carried from elsewhere
The following table summarizes our research and development expenses by program for the periods presented(in thousands):
Current report — wording carried from elsewhere
•an increase of approximately $1.8 million in professional fees related to being a publicly traded company.
Current report — wording carried from elsewhere
Other income, net increased $2.9 million in the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily due to an increase in interest income of $3.3 million related to higher interest earned on our money market funds due to larger cash balances invested, offset by $0.4 million of expense related to the change in fair value of our warrant liability.
Current report — wording carried from elsewhere
•The increase in net loss was offset by:
Current report — wording carried from elsewhere
•Cash flow used in operations increased due to an increase in prepaid assets related to prepaid insurance.