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Brain drug developer Alto Neuroscience prices $129M IPO

Another biotechnology company has hit Wall Street via an initial public offering, the third to do so this year in an uptick of IPO activity that suggests rebounding investor interest in life sciences stocks.

Alto Neuroscience raised about $129 million on Thursday, selling 8,040,000 shares at $16 apiece. The company’s stock will trade on the New York Stock Exchange under the ticker symbol “ANRO.”

Alto’s pricing follows January IPOs from CG Oncology and Arrivent Biopharma. Combined, the three have raised $684 million, significantly more than what the first three biotechs to price IPOs last year raised.

Alto is developing drugs for central nervous system diseases, focused on conditions such as major depressive disorder, post-traumatic stress disorder and schizophrenia. Its approach relies on developing new biomarkers to identify people most likely to respond to its treatments.

Like CG and Arrivent, the Los Altos, California-based company has several drugs in clinical testing, including two that are in mid-stage trials.

One of Alto’s most advanced candidates, ALTO-100, is being studied as a monotherapy or in combination with other antidepressants for people with major depressive disorder. A second program, dubbed ALTO-300, is in a trial testing it as a supplement to antidepressants like selective serotonin reuptake inhibitors.

In December, Alto read out summary results from a Phase 2a study of ALTO-300, which tested how the drug works in people who have as inadequate response to traditional antidepressants. Trial participants were randomized according to a biomarker identified by Alto’s researchers. Those with the biomarker experienced greater improvement, Alto said. Further Phase 2b data are expected in 2025.

Prior to its IPO, Alto had raised $143 million in private financing, including a Series C round in November that brought in investment from Eli Lilly. It emerged from stealth in 2021, led by Stanford researcher Amit Etkin, a neuroscientist and psychiatrist whose research Alto is using to inform its approach.

Alto’s drugs come from elsewhere, however. It either acquired or licensed rights to the five candidates listed in its pipeline.

Alto’s IPO success fits a recent pattern of investors backing young biotech companies that have already reached clinical testing. In prior years, when biotech stocks were surging, many startups going public were preclinical.

All but two of the last ten biotechs, including Alto, to price an IPO had a drug in mid- or late-stage testing, according to BioPharma Dive data.

Several other drug companies aim to go public in the coming weeks, including Metagenomi, Kyverna Therapeutics and Aprinoia Therapeutics. Their success in pricing offerings could send more convincing signals of a biotech turnaround. Last year, only 19 companies priced an offering, the lowest total in at least six years.

Fractyl Health, a company with a medical device approved in Europe and a gene therapy in preclinical development, also raised $110 million in an IPO Thursday.