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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to .

Commission file number 001-41944

_________________________

Alto Neuroscience, Inc.

(Exact name of registrant as specified in its charter)

_________________________


Delaware			83-4210124
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

650 Castro Street, Suite 450 Mountain View, CA			94041
(Address of Principal Executive Offices)			(Zip Code)

(650) 200-0412

Registrant’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

ANRO

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The number of shares of registrant’s Common Stock outstanding as of August 8, 2025 was 27,076,629.

Table of Contents


		Page
Part I - Financial Information
	Item 1. Financial Statements (Unaudited)	F-1
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4. Controls and Procedures	37
Part II - Other Information
	Item 1. Legal Proceedings	38
	Item 1A. Risk Factors	38
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
	Item 3. Defaults Upon Senior Securities	38
	Item 4. Mine Safety Disclosures	39
	Item 5. Other Information	39
	Item 6. Exhibits	40
Signatures		42

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, plans, or intentions relating to product candidates and markets and business trends are forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “plan,” “potential,” “predict,” “project,” “shall,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions.

These statements involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•the initiation, timing, progress, and results of our research and development programs, preclinical studies, any clinical trials, and IND and other regulatory submissions;

•the ability of our approach to reproducibly predict treatment outcomes for product candidates amongst identified patient populations and achieve clinical success;

•our ability to continue to identify appropriate biomarkers for use in further clinical development;

•the timing of and costs involved in obtaining and maintaining regulatory approval of our current product candidates and any future product candidates that we may identify or develop;

•the beneficial characteristics, including potential safety, efficacy, and therapeutic effects, of our product candidates;

•our ability to efficiently and cost-effectively conduct our current and future clinical trials;

•our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates, if approved;

•our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements, including our ability to comply with our financial obligations pursuant to the terms of such agreements;

•the timing and likelihood of the achievement of milestones pursuant to our existing collaboration and licensing agreements;

•our ability to identify and develop product candidates for treatment of additional indications;

•the performance of our third-party service providers, including our suppliers and manufacturers;

•the rate and degree of market acceptance and clinical utility for our current product candidates and any other product candidates we may develop;

•the effects of competition with respect to our current product candidates or any of our future product candidates, as well as innovations by current and future competitors in our industry;

•our estimates regarding the potential market opportunities and the number of patients for our product candidates and any future product candidates, if approved for commercial use;

•the implementation of our strategic plans for our business, any product candidates we may develop;

•our intellectual property position, including the scope of protection we are able to establish, maintain, defend and enforce for intellectual property rights covering our product candidates and our Precision Psychiatry Platform;

•our ability to attract and retain key scientific or management personnel;

Table of Contents

•regulatory and legal developments in the United States and foreign countries;

•our ability to attract and retain employees and collaborators with development, regulatory, and commercialization expertise;

•our ability to comply with the terms of our loan agreements and our expectations regarding our ability to access additional tranches thereunder;

•the accuracy of our estimates regarding future expenses, future revenue, capital requirements, and need for additional financing;

•the anticipated impact of global economic uncertainty, financial market conditions and geopolitical events, including the conflict between Ukraine and Russia, the regional conflict in the Middle East, geopolitical tensions in China, high levels of inflation, fluctuating interest rates, and tariffs on our business, results of operations, and financial condition;

•the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; and

•our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act.

These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report and are subject to risks and uncertainties. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You are urged to carefully review the disclosures we make concerning risks and other factors that may affect our business and operating results under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, or Annual Report, under “Item 1A. Risk Factors” in this Quarterly Report, and in our other reports filed with the Securities and Exchange Commission, or SEC. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in such statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Any public statements or disclosures by us following this Quarterly Report that modify or impact any of the forward-looking statements contained in this Quarterly Report will be deemed to modify or supersede such statements in this Quarterly Report. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events, or otherwise.

We routinely use our investor relations website to post presentations to investors and other important information, including information that may be material. Accordingly, we encourage investors and others interested in Alto to review the information it makes public on its investor relations website.

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Alto Neuroscience, Inc. and Subsidiary

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)


	June 30, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	147,585	$	168,229
Prepaid expenses and other current assets	2,261		1,108
Total current assets	149,846		169,337
Restricted cash	500		500
Property and equipment, net	2,308		2,666
Operating right-of-use asset	4,653		5,035
Other assets	570		4
Total assets	$	157,877	$	177,542
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,671	$	1,579
Accrued expenses and other current liabilities	6,458		8,429
Total current liabilities	8,129		10,008
Term loan, non-current	20,122		10,254
Convertible Grant Agreement	2,000		1,304
Lease liability, long-term	4,214		4,516
Total liabilities	34,465		26,082
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock (par value $0.0001), 500,000 shares authorized; 27,072 and 26,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024	3		3
Additional paid-in capital	294,649		289,954
Accumulated deficit	(171,271)		(138,396)
Accumulated other comprehensive income (loss)	31		(101)
Total stockholders’ equity	123,412		151,460
Total liabilities and stockholders’ equity	$	157,877	$	177,542

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Alto Neuroscience, Inc. and Subsidiary

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except per share amounts)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Operating expenses:
Research and development	$	13,124	$	13,184	$	23,098	$	23,136
General and administrative	5,558		5,157		11,260		9,591
Total operating expenses	18,682		18,341		34,358		32,727
Loss from operations	(18,682)		(18,341)		(34,358)		(32,727)
Other income (expense):
Interest income	1,683		2,658		3,510		4,216
Interest expense	(646)		(347)		(1,244)		(693)
Loss on debt extinguishment	—		—		(681)		—
Other, net	(61)		—		(102)		(243)
Total other income, net	976		2,311		1,483		3,280
Net loss	$	(17,706)	$	(16,030)	$	(32,875)	$	(29,447)
Other comprehensive income (loss):
Change in fair value attributable to instrument specific credit risk	22		—		156		—
Foreign currency translation	(5)		(5)		(24)		(10)
Total other comprehensive income (loss)	17		(5)		132		(10)
Comprehensive loss	$	(17,689)	$	(16,035)	$	(32,743)	$	(29,457)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.65)	$	(0.60)	$	(1.21)	$	(1.32)
Weighted-average number of common shares outstanding, basic and diluted	27,072		26,913		27,061		22,312

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Alto Neuroscience, Inc. and Subsidiary

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

(in thousands, except per share amounts)


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity (Deficit)
(Par Value of Shares $0.0001)	Shares (#)	Amount ($)		Shares (#)	Amount ($)
Balance at December 31, 2023	29,919	$	141,477	3,832	$	—	$	5,372	$	(76,965)	$	(79)	$	(71,672)
Exercise of common stock options	—	—		69	—		10		—		—		10
Issuance of common stock for conversion of preferred stock	(29,919)	(141,477)		13,664	2		141,475		—		—		141,477
Exercise of warrant	—	—		73	—		—		—		—		—
Initial public offering of common stock, net of offering cost of $4,643	—	—		9,246	1		132,936		—		—		132,937
Reclassification of warrant to equity	—	—		—	—		1,595		—		—		1,595
Other comprehensive loss	—	—		—	—		—		—		(5)		(5)
Stock compensation expense	—	—		—	—		2,179		—		—		2,179
Net loss	—	—		—	—		—		(13,417)		—		(13,417)
Balance at March 31, 2024	—	$	—	26,884	$	3	$	283,567	$	(90,382)	$	(84)	$	193,104
Exercise of common stock options	—	—		20	—		61		—		—		61
Issuance of common stock for MedRx Agreement	—	—		47	—		735		—		—		735
Other comprehensive loss	—	—		—	—		—		—		(5)		(5)
Stock compensation expense	—	—		—	—		1,888		—		—		1,888
Settlement of initial public offering cost	—	—		—	—		23		—		—		23
Net loss	—	—		—	—		—		(16,030)		—		(16,030)
Balance at June 30, 2024	—	$	—	26,951	$	3	$	286,274	$	(106,412)	$	(89)	$	179,776

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Alto Neuroscience, Inc. and Subsidiary

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

(in thousands, except per share amounts)


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
(Par Value of Shares $0.0001)	Shares (#)	Amount ($)		Shares (#)	Amount ($)
Balance at December 31, 2024	—	$	—	26,987	$	3	$	289,954	$	(138,396)	$	(101)	$	151,460
Exercise of common stock options	—	—		85	—		198		—		—		198
Issuance of K2 warrants	—	—		—	—		524		—		—		524
Stock compensation expense	—	—		—	—		1,968		—		—		1,968
Other comprehensive income	—	—		—	—		—		—		115		115
Net loss	—	—		—	—		—		(15,169)		—		(15,169)
Balance at March 31, 2025	—	$	—	27,072	$	3	$	292,644	$	(153,565)	$	14	$	139,096
Other comprehensive income	—	—		—	—		—		—		17		17
Stock compensation expense	—	—		—	—		2,005		—		—		2,005
Net loss	—	—		—	—		—		(17,706)		—		(17,706)
Balance at June 30, 2025	—	$	—	27,072	$	3	$	294,649	$	(171,271)	$	31	$	123,412

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Alto Neuroscience, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Six months ended June 30,
	2025		2024
Cash Flows from Operating Activities:
Net loss	$	(32,875)	$	(29,447)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	3,973		4,067
Depreciation and amortization	340		210

Non-cash interest expense related to term loan	362		196
Non-cash lease expense	382		126
Non-cash research and development license expense	—		735
Loss on disposal of assets	42		18
Change in other, net	124		243
Loss on extinguishment of debt	681		—
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(1,183)		(1,657)
Accounts payable	57		869
Accrued liabilities and other liabilities	(2,238)		1,963
Net cash used in operating activities	(30,335)		(22,677)
Cash Flows from Investing Activities:
Capital expenditures	(24)		(564)
Net cash used in investing activities	(24)		(564)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock from initial public offering	—		137,579
Payments on issuance cost from initial public offering	—		(3,225)
Payments on issuance cost from registration statement	(556)		—
Proceeds from issuance of term loan, net	19,688		—
Repayment of former term loan	(10,213)		—
Payment of loan financing cost	(127)		—
Payments on issuance cost from Series C preferred stock financing	—		(100)
Proceeds from exercise of stock options	198		71
Proceeds from Convertible Grant Agreement	750		—
Net cash provided by financing activities	9,740		134,325
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(25)		(10)
Net (decrease) increase in cash, cash equivalents and restricted cash	(20,644)		111,074
Cash, cash equivalents and restricted cash at the beginning of the period	168,729		82,548
Cash, cash equivalents and restricted cash at the end of the period	$	148,085	$	193,622
Supplemental Disclosure of Non-cash Activities




Conversion of preferred stock into common stock upon completion of initial public offering	$	—	$	141,477
Reclassification of preferred warrant liability to equity	$	—	$	1,595
Reclassification of deferred offering costs to equity	$	—	$	1,393
Issuance of warrants in connection with term loan agreement	$	524	$	—
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	770	$	499

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Description of the Business

Alto Neuroscience, Inc. (the “Company” or “Alto”) was incorporated in Delaware on March 25, 2019. The Company maintains its headquarters in Mountain View, California. The Company has one wholly-owned subsidiary in Australia that was formed during 2020 to conduct clinical trials.

Alto is a clinical-stage biopharmaceutical company with a mission to redefine psychiatry by leveraging neurobiology to develop personalized and highly effective treatment options. Through insights derived from the Company’s scalable and proprietary Precision Psychiatry Platform, the Company aims to discover brain-based biomarkers to better identify which patients are more likely to respond to its novel product candidates. The Company’s current pipeline consists of seven clinical-stage assets addressing high-need therapeutic areas, focusing on major depressive disorder (“MDD”), bipolar depression (“BPD”), treatment resistant depression (“TRD”), and schizophrenia.

Liquidity and Capital Resources

The Company has incurred significant operating losses since inception and has relied upon equity financings to fund its operations. At June 30, 2025, the Company had an accumulated deficit of approximately $171.3 million. As the Company continues to incur losses, its transition to profitability will depend on the successful development, approval and commercialization of product candidates and on the generation of sufficient revenues to support its cost structure. No assurance can be provided that the Company will ever be profitable, and unless or until it becomes profitable, the Company will need to continue to raise additional capital.

In February 2024, the Company completed its initial public offering (“IPO”) of its common stock. The Company issued and sold 9,246,000 shares of common stock at a public offering price of $16.00 per share, which included 1,206,000 shares sold pursuant to the exercise of the underwriters’ option to purchase additional shares, and received net proceeds of $133.0 million after deducting underwriting discounts and commissions and other offering costs. Upon completion of the IPO, all outstanding shares of the Company’s outstanding preferred stock converted into an aggregate of 13,664,261 shares of common stock. In addition, the IPO resulted in the net exercise and conversion of all outstanding Series A Preferred Stock Warrants for an aggregate of 72,631 shares of common stock.

2. Summary of Significant Accounting Policies and Basis of Presentation

Basis of Presentation

The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and include the accounts of Alto and its wholly-owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation.

The interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the audited annual financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2025 and its results of operations and statements of equity for the three and six months ended June 30, 2025 and 2024 and cash flows for the six months ended June 30, 2025 and 2024. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the related notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 20, 2025 (the “Annual Report”).

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results may differ materially from those estimates. The most significant estimates and assumptions in the Company’s condensed consolidated financial statements relate to the determination of the volatility of its common stock (as an input for calculating stock-based compensation and warrants), estimating accrued or prepaid research and development expenses, and the valuation of the preferred stock warrant liability. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Significant Accounting Policies

The Company’s significant accounting policies used in the preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2025 are consistent with those discussed in Note 3 to the consolidated financial statements in the Annual Report.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The standard will be effective starting in annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statement disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosures about specific expense categories presented on the face of the income statement. The standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which affects entities that settle convertible debt instruments for which the conversion privileges were changed to induce conversion. The standard is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

3. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	June 30, 2025		December 31, 2024
Prepaid insurance	$	1,325	$	176
Other prepaid expenses and other current assets	936		932
Total prepaid expenses and other current assets	$	2,261	$	1,108

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

Property and Equipment, Net

Property and equipment, net are as follows (in thousands):


	June 30, 2025		December 31, 2024
Laboratory equipment	$	2,262	$	2,306
Office equipment and furniture	453		448
Computer software and equipment	669		670
Leasehold improvements	246		246
Less: accumulated depreciation	(1,322)		(1,004)
Property and equipment, net	$	2,308	$	2,666

During the three and six months ended June 30, 2025, the Company recorded depreciation and amortization expense of $0.1 million and $0.3 million, respectively. During the three and six months ended June 30, 2024, the Company recorded depreciation and amortization expense of $0.1 million and $0.2 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	June 30, 2025		December 31, 2024
Accrued payroll, vacation and employee-related expenses	$	2,793	$	4,951
Accrued research	1,785		1,625
Accrued interest, short term	150		78
Other accruals and current liabilities	757		905
Lease liability, short term	973		870
Total accrued expenses and other current liabilities	$	6,458	$	8,429

4. Debt

K2 HealthVentures LLC Loan Agreement

On December 16, 2022, the Company entered into a Loan and Security Agreement (the “Original Loan Agreement”) with K2 HealthVentures LLC as a lender, the other lenders party thereto (collectively, the “Lender”), K2 HealthVentures LLC, as administrative agent for Lender (the “Administrative Agent”), and Ankura Trust Company, LLC, as collateral agent for the Lender. Pursuant to the terms of the Original Loan Agreement, the Lender agreed to make available to the Company term loans (each, collectively, the “Term Loan”) in an aggregate principal amount of up to $35.0 million. As of December 31, 2024, the Company had drawn a principal amount of $10.0 million. The Lender’s commitment to make available additional Term Loans under the Original Loan Agreement expired without being drawn on January 1, 2025. The Original Loan Agreement had a Term Loan maturity date of December 1, 2026 (the “Original Term Loan Maturity Date”).

On January 13, 2025, the Company entered into an amendment to the Original Loan Agreement (the “Amendment” and the Original Loan Agreement as amended thereby, the “Amended Loan Agreement”) to, among other things, extend the Original Term Loan Maturity Date and increase the maximum available amount of term loans. The Amended Loan Agreement provides for term loans in an aggregate principal amount of up to $75.0 million, consisting of:

•a first tranche term loan of $20.0 million;

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

•second tranche term loans of up to $30.0 million in the aggregate available at the Company’s request until December 15, 2025, subject to certain time-based, clinical milestones; and

•third tranche term loans of up to $25.0 million in the aggregate available at the Company’s request subject to the Lender’s approval.

The Company drew $20.0 million upon entry into the Amendment (approximately $10.0 million of which was used to refinance obligations under the Original Loan Agreement and pay fees and expenses incurred in connection with the Amendment). A portion of the second tranche term loans is tied to the timing of data from the Company’s Phase 2b study of ALTO-300; based on expected timing of top line data for this study, the Company anticipates that $20.0 million of the second tranche term loans will expire without being drawn.

The Amended Loan Agreement has a Term Loan maturity date of January 1, 2029 (the “Amended Term Loan Maturity Date”). The Amended Loan Agreement provides for an interest only period until January 1, 2027, following which the Term Loan shall be repaid in equal monthly payments through the Amended Term Loan Maturity Date.

The Term Loan bears interest at (i) a variable per annum cash pay rate equal to the Prime Rate plus 1.45% (subject to a floor of 8.45% per annum) and (ii) a fixed per annum paid-in-kind rate equal to 1.0%. Interest is due and payable monthly in arrears. Upon final payment or prepayment of the Term Loan, the Company is required to pay a final payment equal to 5.95% of the amount borrowed.

The Amended Loan Agreement was accounted for as a debt extinguishment, as the new loan was considered substantially different from the original loan. The Company recognized debt issuance costs and discount upon issuance of $2.0 million within Term Loan, non-current on its condensed consolidated balance sheet and recorded a loss on debt extinguishment of $0.7 million, which was recorded within loss on debt extinguishment in its condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2025.

Fees

Under the terms of the Original Loan Agreement, the Company was obligated to pay a final fee equal to 6.25% of the aggregate amount of the term loans funded thereunder (the “Original Exit Fee”) upon the earliest of (i) the Original Term Loan Maturity Date, (ii) the acceleration of the Term Loan, and (iii) the prepayment of the Term Loan. The Company was also obligated to pay the Lender a one-time facility fee of $0.2 million (“Original Facility Fee”) on the initial closing date. The Original Exit Fee of $0.6 million and Original Facility Fee of $0.2 million were recorded as debt discount, and were being accreted using the effective interest method within interest expense in the consolidated statements of operations and comprehensive loss. The Company’s obligation to pay the Original Exit Fee remains outstanding, and the timing for payment thereof was unaffected by, and reaffirmed in connection with, the Amendment.

The Company was obligated to pay the Lender a one-time facility fee of $0.3 million upon entry into the Amendment. The Company is also obligated to pay a funding fee on each third tranche term loan in an amount equal to the sum of 0.5% multiplied by the amount of such third tranche term loan, if and when funded. Under the terms of the Amended Loan Agreement, the Company is obligated to pay a final fee equal to 5.95% of the aggregate amount of the Term Loan funded thereunder (the “Amended Exit Fee”) upon the earliest of (i) the Amended Term Loan Maturity Date, (ii) the acceleration of the Term Loan, and (iii) the prepayment of the Term Loan. As of June 30, 2025, the amount owed under the Amended Exit Fee is equal to $1.2 million. The Original Exit Fee and the Amended Exit Fee have been fully accrued and recorded as debt discount as of the closing date of the Amendment and will be accreted using the effective interest method within interest expense in the consolidated statement of operations and comprehensive loss.

The Company has the option to prepay all, but not less than all, of the Term Loan prior to the Amended Term Loan Maturity Date, which would require that the Company pay the Lender a prepayment penalty fee based on a percentage of the outstanding principal balance and the funding date of the individual tranches thereunder. As to each such tranche under the Term Loan, such fee shall be equal to 3% if the payment occurs on or before 24 months after the funding date of such tranche, 2% if the prepayment occurs more than 24 months after, but on or before 36 months after the funding date of such tranche, or 1% if the prepayment occurs more than 36 months after the funding date of such tranche. No prepayment penalty fee is required if the applicable tranche is prepaid within six months prior to the Amended Term Loan Maturity Date or refinanced with the Lender.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Terms

Following an initial period with no financial covenants, beginning January 1, 2026, the Company must maintain, at all times, a cash runway of at least 5 months, provided that this covenant will be waived during any period in which the Company’s market capitalization exceeds $700.0 million.

The Company’s obligations under the Amended Loan Agreement are secured by a first priority security interest in substantially all of its assets (with an exclusion for intellectual property). The Amended Loan Agreement contains customary representations and warranties, and also includes customary events of default, including payment default, breach of covenants, change of control, and material adverse effects. The Amended Loan Agreement restricts certain activities, such as disposing of the Company’s business or certain assets, incurring additional debt or liens or making payments on other debt, making certain investments and declaring dividends, acquiring or merging with another entity, engaging in transactions with affiliates or encumbering intellectual property, among others.

Upon the occurrence of an event of default, a default interest rate of an additional 5% per annum may be applied to the outstanding loan balances, and the Lender may declare all outstanding obligations immediately due and payable and exercise all of its rights and remedies as set forth in the Amended Loan Agreement and under applicable law.

Warrants

In connection with the Original Loan Agreement, the Company issued to the Lender a warrant (the “Original Warrant”), which Original Warrant is exercisable for 35,773 shares of the Company’s common stock and expires on December 15, 2032. In connection with the Amendment, the Original Warrant was amended and restated (the “Amended and Restated Warrant”) to reduce the exercise price from $10.49 to $3.71 per share (the “Exercise Price”). The incremental value associated with this modification was immaterial, and was included as part of the determination of the loss on debt extinguishment, with a corresponding increase in additional paid-in capital during the six months ended June 30, 2025. Further, in connection with the Amendment, the Company issued an additional warrant (the “New Warrant”, together with the Amended and Restated Warrant, the “Warrants”) to purchase a number of shares of the Company’s common stock calculated as follows: (a) (i) 0.025, multiplied by (ii) the aggregate principal amount of the term loans actually funded under the Amended Loan Agreement, divided by (b) the Exercise Price. The New Warrant expires on January 13, 2035.

As of June 30, 2025 the New Warrant allowed for the purchase of 134,691 shares of the Company’s common stock. If the Company draws down on additional tranches of the Term Loan, the number of shares available for purchase by the Lender under the New Warrant would increase. The Company determined the estimated fair value of the New Warrant at the date of issuance to be $0.5 million, which was included as part of the determination of the loss on debt extinguishment, with a corresponding increase in additional paid-in capital. As of the date of the issuance, significant assumptions include an expected life of 10 years, a risk-free rate of 4.79% and an expected volatility of 89.47%. See Note 10 for additional information regarding the New Warrant.

Loan Conversion Feature

Under the terms of the Amended Loan Agreement, the Lender may, at its option, elect to convert up to $9.0 million of the then outstanding Term Loan (the “Conversion Amount”) ($4.0 million of which was reflected in the Original Loan Agreement and $5.0 million of which is reflected in the Amended Loan Agreement) into shares of the Company’s common stock (the “Conversion Shares”). The number of shares to be issued upon conversion is determined by dividing (a) the portion of the term loan amount converted, by (b) the Applicable Conversion Price. Applicable Conversion Price means (i) with respect to any conversion of up to $4.0 million of the Conversion Amount, $10.49, and (ii) with respect to any conversion of the remaining $5.0 million of the Conversion Amount, $4.83, in each case subject to certain adjustments set forth in the Amended Loan Agreement. The Company determined that the embedded conversion option is not required to be separated from the Term Loan. The embedded conversion option meets the derivative accounting scope exception since the embedded conversion option is indexed to the Company’s own common stock and qualifies for classification within stockholders’ equity.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

Interest Expense and future repayments

The Company recorded interest expense at a weighted average rate of 12.96% related to the Loan Agreement for both the three and six months ended June 30, 2025. The Company recorded interest expense at a weighted average rate of 10.70% related to the Loan Agreement for both the three and six months ended June 30, 2024. During the three and six months ended June 30, 2025, the Company recorded interest expense of $0.6 million and $1.2 million, respectively. During the three and six months ended June 30, 2024, the Company recorded interest expense of $0.4 million and $0.7 million, respectively.

Future principal debt payments and Exit Fee of the term loan funded as of June 30, 2025 are as follows (in thousands):


2025 (remainder of year)	$	—
2026	—
2027	9,117
2028	9,977
2029	906
Total principal payments	20,000
Exit Fee	1,815
Deferred interest	94
Total principal payments and Exit Fee	21,909
Less: unamortized debt discount	(1,787)
Term loan, non-current	$	20,122

The Wellcome Trust Limited Convertible Grant Agreement

In July 2024, the Company entered into a convertible loan agreement (the “Convertible Grant Agreement”) with The Wellcome Trust Limited (“Wellcome”). The Convertible Grant Agreement provides for an unsecured convertible loan (the “Convertible Loan”) from Wellcome of up to approximately $11.7 million, payable to Alto in six tranches, of which up to $2.0 million could be funded upon the execution of the Convertible Grant Agreement and the remainder of which will be funded upon the completion of certain milestones as set forth in the Convertible Grant Agreement. As of June 30, 2025, the Company has drawn down the entirety of the $2.0 million execution tranche and will continue to access the loan as needed as the ALTO-100 study in bipolar depression progresses. Interest will accrue at an annual rate equal to the Sterling Overnight Index Rate plus 2%, subject to potential adjustment if such annual interest rate equals or exceeds 9% at any time. Proceeds from the Convertible Loan may be used by the Company solely to advance development of ALTO-100 in bipolar depression. The Convertible Grant Agreement also includes customary covenants, representations and warranties, including with respect to the conduct of the Company’s Phase 2b clinical trial evaluating ALTO-100 in patients with bipolar depression and certain information and audit rights of Wellcome in connection therewith, as well as with respect to the Company’s efforts to develop and exploit ALTO-100.

At any time after the second anniversary of the effective date of the Convertible 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 the Company’s 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 Convertible Grant Agreement provides that in no event shall the aggregate number of shares of 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 Common Stock outstanding as of the date of the Convertible Grant Agreement. At any time after the fifth anniversary of the effective date of the Convertible 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.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

Future principal debt payments of the Convertible Grant Agreement funded as of June 30, 2025 are as follows (in thousands):


2025 (remainder of year)	$	—
2026	—
2027	—
2028	—
2029	2,000
Term loan, non-current	$	2,000

The Company assessed the terms and features of the Convertible Grant Agreement and determined that the Company was eligible to elect the fair value option under ASC 825, Financial Instruments. The Convertible Grant Agreement contains various embedded features and the election of the fair value option allowed the Company to bypass analysis of potential embedded derivatives and further analysis of bifurcation of any recognized financial liabilities. Under the fair value option, the financial liability is initially measured at its fair value on the issue date and subsequently remeasured at estimated fair value on a recurring basis at each reporting date. Changes in the fair value of the Convertible Grant Agreement, which include accrued interest, if any, are recorded as a component of other, net or within other comprehensive income (loss) in the condensed consolidated statements of operations and comprehensive loss. The Company has not elected to present interest expense separately from changes in fair value and therefore will not present interest expense associated with the Convertible Grant Agreement. Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income or loss.

The Company determined the initial fair value of the Convertible Grant Agreement using a probability-weighted income approach and recorded the loan at the fair value of the initial draw down of $1.3 million during 2024 and the second draw down of $0.8 million during the three months ended June 30, 2025 in the condensed consolidated balance sheet at their respective issuance dates. The Company remeasured the fair value of the Convertible Grant Agreement as of June 30, 2025 to be $2.0 million using a probability-weighted income approach. The Company calculated discounted cash flows of the Convertible Grant Agreement using a discount rate of 19.30% and adjusted for the probability of various repayment scenarios.

The following table reconciles the change in fair value of the Convertible Grant Agreement during the six months ended June 30, 2025 (in thousands):


Beginning fair value balance as of December 31, 2024	$	1,304
Issuance of new tranches	750
Principal payments	—
Changes in fair value reported in statements of operations	102
Changes in fair value reported in other comprehensive loss	(156)
Ending fair value balance as of June 30, 2025	$	2,000

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

5. Fair Value

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds and the Convertible Grant Agreement. The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):


	June 30, 2025
	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents:
Money market funds	$	147,361	$	147,361	$	—	$	—
Restricted cash:
Money market funds	500		500		—		—
Total assets	$	147,861	$	147,861	$	—	$	—
Liabilities:
Convertible Grant Agreement	$	2,000	$	—	$	—	$	2,000
Total liabilities	$	2,000	$	—	$	—	$	2,000


	December 31, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents:
Money market funds	$	168,136	$	168,136	$	—	$	—
Restricted cash:
Money market funds	500		500		—		—
Total assets	$	168,636	$	168,636	$	—	$	—
Liabilities:
Convertible Grant Agreement	$	1,304	$	—	$	—	$	1,304
Total liabilities	$	1,304	$	—	$	—	$	1,304

The Company classifies its money market funds, which are valued based on quoted market prices in an active market with no valuation adjustment, as Level 1 assets within the fair value hierarchy. The Company’s Convertible Grant Agreement is classified as a Level 3 instrument under the fair value hierarchy as the fair values were determined based on significant inputs not observable in the market. See Note 4 for additional information on the Convertible Grant Agreement.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

6. Asset Purchase and License Agreements

From time to time, the Company enters into asset purchase and license agreements with third parties. For a detailed description of the significant agreements with certain financial commitments to which the Company is a party, see Note 10 to the audited consolidated financial statements included in the Company’s Annual Report. As of June 30, 2025, the Company was a party to the following significant agreements pursuant to which payments were made during the three and six months ended June 30, 2024 and 2025:

Teva Asset Purchase Agreement

Effective October 4, 2021, the Company entered into an agreement with Teva Pharmaceutical Industries, Ltd to acquire patents, know-how and other rights to ALTO-203 and a specified related compound (the “Teva Acquired Compound”), and assumed all post-acquisition liabilities related thereto. In April 2024, the Company achieved a clinical milestone related to the initiation of its Phase 2 proof-of-concept (“POC”) clinical trial evaluating ALTO-203 resulting in a cash payment of $0.5 million which was recorded in research and development expenses during the three and six months ended June 30, 2024. Except for the foregoing $0.5 million milestone payment, no additional milestones or royalties were paid or accrued during the three and six months ended June 30, 2025 or 2024 related to this agreement. For a detailed description of the financial terms of the Teva asset purchase agreement, see Note 10 to the audited consolidated financial statements included in the Annual Report.

MedRx License Agreement

On September 25, 2023, the Company entered into a joint development and license agreement (the “MedRx Agreement”) with MedRx Co., Ltd. (“MedRx”), pursuant to which the Company 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 the Company’s ALTO-101 (the “MedRx Licensed Products”) for all therapeutic, prophylactic, and diagnostic uses. The Company granted MedRx an exclusive, sublicensable, worldwide license under certain patent rights and know-how relating to ALTO-101 owned or controlled by the Company, including certain patents and know how licensed to the Company pursuant to the Sanofi Agreement, solely to conduct pre-clinical development and manufacturing of the MedRx Licensed Products for the Company in accordance with the MedRx Agreement and a separate manufacturing and supply agreement to be entered into between the Company and MedRx. In April 2024, the Company achieved the desired pharmacokinetic profile for ALTO-101 in a Phase 1 trial resulting in a milestone payment to MedRx comprising $0.8 million, paid in cash, as well as 46,875 shares of the Company’s common stock. The Company recognized $1.5 million of expense related to this milestone, which was recorded in research and development expenses in the consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2024. Except for the $1.5 million milestone discussed above, no additional milestones or royalties were paid or accrued during the three and six months ended June 30, 2025 or 2024 related to this agreement. For a detailed description of the financial terms of the MedRx Agreement, see Note 10 to the audited consolidated financial statements included in the Annual Report.

Chase Asset Purchase Agreement

On May 31, 2025 (the “Chase Closing Date”), the Company entered into an Asset Purchase Agreement (“Chase Agreement”) with Chase Therapeutics Corporation (“Chase”) to acquire all patent, know-how and other rights to ALTO-207, ALTO-208, and certain related assets (the “Acquired Compounds”).

On the Chase Closing Date, the Company made an initial payment of $1.8 million in cash and reimbursed Chase $1.2 million to offset certain expenses incurred by the Seller in connection with the Chase Agreement, which are recorded in Research and development in the consolidated statement of operations. The Company is obligated to pay Chase up to an aggregate of $71.5 million after the Chase Closing Date (the “Chase Milestone Payments”) upon the achievement of certain clinical, regulatory, and sales milestones related to the Acquired Compounds (the “Chase Milestone Events”). Of the potential Milestone Payments, $41.0 million in aggregate are tied to commercial success of the product candidates. Other than with respect to the first Chase Milestone Event, Chase may elect to receive the Chase Milestone Payments for each Chase Milestone Event either as cash or as restricted shares of the Company’s common stock, subject to an overall limitation of a maximum of 5,387,353 shares of common stock that may be issued pursuant to the Chase Agreement (representing 19.9% of the outstanding shares of the common stock as of the Chase Closing Date). No milestones or royalties were paid or accrued during the three and six months ended June 30, 2025 related to this agreement.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

The number of shares of common stock issuable for a Chase Milestone Payment paid in restricted shares of common stock, will be determined by dividing the Chase Milestone Payment by the applicable Company Stock Price (as defined below), rounded down to the nearest share. The Company Stock Price is defined as the five-day volume-weighted average price per share of common stock as reported by Bloomberg and calculated during regular trading hours over the five consecutive trading day period ending on: (a) with respect to a Chase Milestone Payment pursuant to Chase’s election to receive a Chase Milestone Payment as common stock, the first trading day immediately following an Achievement Notice (as defined in the Chase Agreement); and (b) with respect a Deadline Milestone Payment (as defined below), the first trading day immediately following the applicable anniversary of the Closing Date.

The Company must use commercially reasonable efforts to develop, seek Regulatory Approval (as defined in the Chase Agreement) for, and commercialize products containing or comprising the Acquired Compounds in the United States. If the Company fails to achieve certain Chase Milestone Events by an agreed date, the Company must either pre-pay a portion of the relevant Chase Milestone Payment associated with that Chase Milestone Event, (a “Deadline Milestone Payment”), which pre-payment obligation may be paid in restricted shares of Common Stock, or transfer the related Acquired Compound back to Chase, in the Company’s sole discretion.

7. Stock-Based Plans

2024 Equity Incentive Plan

In January 2024, the Board adopted, and the Company’s stockholders approved, the 2024 Equity Incentive Plan (the “2024 Plan”), which became effective on the execution of the underwriting agreement related to the IPO. Under the 2024 Plan, the Company may grant incentive stock options to employees, including employees of any parent or subsidiary, and nonstatutory stock options, stock appreciation rights, RSAs, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. The 2024 Plan is a successor to the 2019 Equity Incentive Plan, which was adopted by the Board of Directors in March 2019 (as amended, the “2019 Plan”). A total of 2,000,000 shares of common stock were approved to be initially reserved for issuance under the 2024 Plan. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2024 Plan automatically increases on January 1 of each calendar year, starting on January 1, 2025 and continuing through and including January 1, 2034, in an amount equal to 5% of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Board. No future issuances were made under the 2019 Plan upon the effectiveness of the 2024 Plan.

As of June 30, 2025 and December 31, 2024, the total number of shares authorized to be issued under the 2024 Plan was 3,349,328 and 2,000,000, respectively. As of June 30, 2025 and December 31, 2024, there were 527,278 and 198 shares of common stock, respectively, reserved and available for issuance under the 2024 Plan.

2025 Inducement Plan

On February 6, 2025, the Board adopted the 2025 Inducement Plan (the “Inducement Plan”), pursuant to which it reserved 500,000 shares of common stock for issuance to individuals who were not previously employees of the Company, or who are returning to employment following a bona fide period of non-employment with the Company, as an inducement material to such persons entering into employment with the Company, in accordance with New York Stock Exchange Listed Company Manual Rule 303A.08. Under the Inducement Plan, the Company has the ability to issue non-statutory stock options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock awards, and performance awards. As of June 30, 2025, no awards have been granted under the Inducement Plan.

Employee Stock Purchase Plan

As of June 30, 2025, the Company had not opened the Employee Stock Purchase Plan for enrollment, and therefore there were no purchases or share issuances during this period.

Stock Options

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

The options have a 10-year life and generally vest over a period of four years, with the first 25% of the award vesting after one year and then monthly thereafter, subject to continuous service. Once the options are exercised, the shares are subject to transfer restrictions under the terms of the Company’s amended and restated certificate of incorporation.

The weighted-average grant date fair value of options granted during the three and six months ended June 30, 2025 for awards subject only to service-based vesting conditions were $1.91 and $2.91 per share, respectively. The weighted-average grant date fair value of options granted during the three and six months ended June 30, 2024 for awards subject only to service-based vesting conditions were $10.19 and $11.28 per share, respectively. Weighted-average grant date fair value assumptions were based on the following:


	Six months ended June 30,
	2025		2024
Exercise price	$	3.86	$	14.73
Fair value of common stock	$	3.86	$	14.73
Expected term (in years)	6.0		6.0
Volatility	88.5%		90.7%
Risk-free rate	4.2%		4.1%
Dividend yield	0.0%		0.0%

The table below summarizes activity related to stock options subject only to service-based vesting conditions (in thousands, except per share amounts):


	Shares	Weighted- average exercise price per share		Weighted – average remaining contractual term (in years)	Aggregate intrinsic value
Outstanding, December 31, 2024	4,515	$	7.88	8.3	$	2,109
Granted	998	3.86
Exercised	(85)	2.32			—
Forfeited and cancelled	(269)	8.47
Outstanding, June 30, 2025	5,159	$	7.16	8.1	$	362
Exercisable at June 30, 2025	2,090	$	6.59	7.0	$	362

As of June 30, 2025, there was approximately $17.2 million of unrecognized stock-based compensation expense related to these service-based unvested stock options which is expected to be recognized over a weighted-average period of 2.7 years.

Restricted Stock Units

The table below summarizes activity related to RSUs subject only to service-based vesting conditions (in thousands, except per share amounts):

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Shares	Weighted-average grant date fair value per share
Outstanding, December 31, 2024	54	$	14.88
Granted	—	—
Vested	—	—
Forfeited and cancelled	—	—
Outstanding, June 30, 2025	54	$	14.88

On March 1, 2024, the Company issued 53,864 RSUs under the 2024 Plan; 50% of the shares of common stock underlying the RSUs vest after 18 months and the remainder vest after 24 months from the grant date. The RSUs are subject only to a service-based vesting condition. Such shares are not accounted for as outstanding until they vest. As of June 30, 2025, the total unrecognized compensation related to unvested RSUs granted was $0.3 million which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 0.7 years.

Performance Option Awards

The Board granted options to purchase common stock to certain employees and consultants that vest upon the achievement of certain performance conditions (“Performance Awards”) such as the completion of a future financing event or upon the achievement of defined clinical milestones or outcomes. The Company did not issue any Performance Awards during the three or six months ended June 30, 2025 and 2024.

During the six months ended June 30, 2024, clinical milestones were met which resulted in the vesting of 194,835 Performance Awards and the recognition of $0.9 million of stock-based compensation expense. During the six months ended June 30, 2025, there were 157,367 Performance Awards that were forfeited. As of June 30, 2025, there are 435,381 Performance Awards vested and outstanding, and no Performance Awards remain unvested. The Performance Awards have a contractual term of ten years. There is no unrecognized stock-based compensation expense related to Performance Awards.

Stock-based Compensation Expense

Non-cash stock-based compensation expense recognized in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Research and development	$	1,018	$	942	$	2,000	$	1,866
General and administrative	987		946		1,973		2,201
Total stock-based compensation expense	$	2,005	$	1,888	$	3,973	$	4,067

In July 2025, the Company’s Board of Directors approved a stock option repricing (see Note 13 for additional information).

8. Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The Company’s unvested restricted common stock is not included in the determination of loss per share until the award vests. Diluted net loss per common share excludes the potential impact of the Company’s convertible preferred stock and warrants because their effect would be anti-dilutive due

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

to the Company’s net loss. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

The following outstanding potentially dilutive common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive (in thousands):


	June 30,
	2025	2024


Common Stock Warrants	170	36
Restricted Stock Units and Award	54	54
Stock options issued and outstanding	5,594	4,882
Total	5,818	4,972

9. Income Taxes

There is no provision for income taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including its net operating losses. Based on its history of operating losses, the Company believes that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for its net deferred tax assets as of June 30, 2025 and December 31, 2024.

On July 4, 2025, new legislation (commonly known as the One Big Beautiful Bill Act or OBBBA) was enacted into law in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain provisions that were originally enacted in the 2017 Tax Cuts and Jobs Act and were set to expire on December 31, 2025, modifications to certain international tax provisions and the restoration of tax treatment for certain business provisions, including 100% bonus depreciation for certain qualified property, domestic research and experimental cost expensing, and the business interest expense limitation. The new legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently evaluating the impact of the OBBBA to its condensed consolidated financial statements.

10. Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Convertible Preferred Stock

Upon closing of the IPO in February 2024, all of the outstanding convertible preferred stock automatically converted into 13,664,261 shares of common stock. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding.

Preferred Stock

Series A Preferred Stock Warrants

In May 2021, in connection with the closing of the Series A Preferred Stock Agreement, the Company issued warrants to the lead Series A investor to purchase an aggregate of 465,917 shares of Series A Preferred Stock (“Series A Preferred Stock Warrants”) at a price of $4.6996 per share. By their terms, the Series A Preferred Stock Warrants expired in February 2024 in connection with the IPO. The Series A Preferred Stock Warrants were exercised and net settled for shares of the Company’s common stock, which resulted in the issuance of 72,631 shares of common stock. The Company remeasured the fair value of the Series A Preferred Stock Warrants immediately prior to their exercise, resulting in an insignificant change in fair value during the six months ended June 30, 2024. The resulting warrant liability was then extinguished upon the net exercise.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

K2 Warrant

In December 2022, in connection with the closing of the Original Loan Agreement, the Company issued a warrant to the Lender to purchase a number of shares of the Company’s Series B convertible preferred stock, or at Lender’s election, next round stock (“K2 Warrant”). The number of shares of convertible preferred stock issuable upon exercise of the warrant was equal to (a) (i) 0.0375, multiplied by (ii) the aggregate principal amount of term loans actually funded under the Original Loan Agreement, divided by (b) the warrant price then in effect. Following the conversion of all outstanding convertible preferred stock to common stock upon the completion of the IPO in February 2024, the K2 Warrant became a warrant to purchase up to an aggregate of 35,773 shares of the Company’s common stock at an exercise price of $10.49 per share (referred to in Note 4 as the Original Warrant). The K2 Warrant was remeasured to fair value immediately prior to the conversion to a common stock warrant, and a change in fair value of $0.2 million was recognized during the six months ended June 30, 2024. The Company determined that the K2 Warrant is equity-classified, and therefore the resulting warrant liability was reclassified to permanent equity, and is not subject to future remeasurement.

On January 13, 2025, in connection with the Amended Loan Agreement (see Note 4 for additional information), the K2 Warrant was amended and restated (referred to in Note 4 as the Amended and Restated Warrant) to reduce the exercise price from $10.49 per share to $3.71 per share (referred to in Note 4 as the Exercise Price). Further, in connection with the Amendment, the Company issued an additional warrant (referred to in Note 4 as the New Warrant and, together with the Amended and Restated Warrant, the Warrants) to purchase a number of shares of the Company’s common stock calculated as follows: (a) (i) 0.025, multiplied by (ii) the aggregate principal amount of the term loans actually funded under the Amended Loan Agreement, divided by (b) the Exercise Price. The New Warrant expires on January 13, 2035. The New Warrant is classified as equity as it meets all the conditions under GAAP for equity classification, and is therefore not subject to ongoing remeasurement. The Company reassesses whether equity classification for the warrant is appropriate upon any changes to the warrants or capital structure, at each balance sheet date.

The Company is conditionally obligated to issue a fixed number of additional shares in connection with the New Warrant (“Additional Warrants”) in the potential amount of 370,400 shares upon the funding of additional amounts under the Term Loan with the same exercise price and contractual term. The contingent obligation to issue the Additional Warrants did not meet the derivative scope exception or equity classification criteria and were accounted for as a derivative liability. The contingently issuable Additional Warrants derivative liability had a de minimis value at the time of issuance and as of June 30, 2025. The Additional Warrants derivative liability will be remeasured each reporting period until settled or extinguished with subsequent changes in fair value recorded through other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The initial fair value of the Additional Warrants derivative liability was determined using a Black-Scholes option pricing model based on the same input assumptions above, with an additional assessment required for the probability that additional amounts under the Term Loan will be funded which would trigger the issuance of the Additional Warrants.

Common Stock and Authorized Shares

As of both June 30, 2025 and December 31, 2024, the Company had 500,000,000 authorized shares of common stock with a par value of $0.0001 per share, of which 27,072,129 and 26,986,560 shares, respectively, were issued and outstanding. On February 6, 2024, the Company amended its certificate of incorporation such that the total number of shares of common stock authorized to be issued was increased to 500,000,000, and the total number of shares of new preferred stock authorized to be issued was 10,000,000 with a par value per share of $0.0001. As of June 30, 2025, no shares of preferred stock were issued or outstanding.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2025 and December 31, 2024, the Company had reserved common stock, on an as-if converted basis, for issuance as follows (in thousands):


	June 30, 2025	December 31, 2024
K2 Warrants	170	36
Stock options issued and outstanding	5,594	5,108
Stock options available for future grant	527	—
Total	6,291	5,144

11. Commitments and Contingencies

From time to time, the Company is subject to occasional lawsuits, investigations and claims arising out of the ordinary course of business. The Company had no significant pending or threatened litigation as of June 30, 2025.

On July 21, 2025, a purported stockholder of the Company filed a lawsuit against the Company, certain executive officers, and certain current and former directors in the United States District Court for the Northern District of California (Case No. 3:25-cv-06105). The complaint is a putative class action alleging violations of the Securities Act of 1933, as amended, or the Securities Act, related to the Company’s IPO in February 2025, and violations of the Exchange Act thereafter. The proposed class consists of purchasers or acquirers of the Company’s common stock pursuant or traceable to the Company’s IPO as well as purchasers or acquirers of the Company’s common stock between February 2, 2024 and October 22, 2024, both dates inclusive. The plaintiff seeks unspecified damages, as well as interest, fees, and costs. The complaint claims, among other things, that the Company’s offering documents and subsequent public disclosures contained materially false and misleading statements and omitted material facts about the prospects of ALTO-100. The Company believes these allegations lack merit, and the Company intends to move to dismiss. The Company has not recorded a liability related to this lawsuit because, at this time, the Company does not believe that an unfavorable outcome is either probable or estimable.

In the ordinary course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown at June 30, 2025. The Company does not anticipate recognizing any significant losses relating to these arrangements.

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Alto Neuroscience, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (Unaudited)

12. Segments

As a single reportable segment entity, the Company’s segment performance measure is consolidated net loss. Asset information is not used by the Company’s President and Chief Executive Officer, its chief operating decision maker (“CODM”) to allocate resources. Certain significant segment expenses below loss from operations are presented in the Company’s consolidated statements of operations and are therefore not presented below. Additional disaggregated significant segment expenses on a functional basis, that are not separately presented on the Company’s condensed consolidated statements of operations, are presented below:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Personnel expenses excluding stock-based compensation	$	5,685	$	4,837	$	11,468	$	9,237
Stock-based compensation	2,005		1,888		3,973		4,067
Direct external program expenses:
ALTO-100	1,501		2,116		2,625		4,323
ALTO-300	653		1,541		1,575		2,657
ALTO-101	893		942		1,862		1,348
ALTO-203	599		865		1,336		1,485
ALTO-207	358		—		358		—
Other research and development (a)	4,050		3,313		5,179		4,563
General and administrative (b)	2,938		2,839		5,982		5,047
Loss from operations	$	18,682	$	18,341	$	34,358	$	32,727

(a) Other research and development expenses primarily consists of license fees, facility charges, third party consultant costs, early research costs related to other product candidates, and other unallocated costs.

(b) General and administrative costs include professional fees, insurance, consultant fees and facility charges.

13. Subsequent Events

In July 2025, the Company’s Board of Directors approved a stock option repricing, which was effective at the close of market on July 3, 2025 (“Repricing Effective Date”). The repricing generally applied to the outstanding options held by then current employees and consultants that had an exercise price greater than $2.35. As of the Repricing Effective Date, the eligible options were immediately repriced such that the exercise price per share for such options was reduced to $2.35 (the closing price of the Company’s common stock on the New York Stock Exchange on the Repricing Effective Date), subject to certain retention requirements. The retention period is 12 months following the Repricing Effective Date and can be accelerated under certain conditions. If an eligible option is exercised prior to the end of the relevant retention period, the participant will be required to pay a premium exercise price equal to the original exercise price per share of such option. There were no changes to the number of shares underlying the eligible options or to the vesting schedules or expiration dates of the eligible options. There were 4,225,763 shares underlying the repriced options, which had then-current exercise prices ranging from $2.44 to $16.00 per share. An incremental $1.5 million of stock based compensation expense will be recognized over the greater of the 12-month retention period or the remaining vesting period of the outstanding options. Options held by non-employee members of the Board were not eligible for the repricing.

F-21

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report and the audited financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report filed with the SEC on March 20, 2025.

As discussed in the section titled “Special Note Regarding Forward Looking Statements,” the following discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to those identified below and those set forth under “Item 1A. Risk Factors” in our Annual Report, under “Item 1A. Risk Factors” in this Quarterly Report, and in our other reports filed with the SEC.

Overview

We are a clinical-stage biopharmaceutical company with a mission to redefine psychiatry by leveraging neurobiology to develop personalized and highly effective treatment options. Through insights derived from our scalable and proprietary Precision Psychiatry Platform, or our Platform, we aim to discover brain-based biomarkers to better identify which patients are more likely to respond to our novel product candidates. Our current pipeline consists of seven clinical-stage assets addressing high-need therapeutic areas, focusing on major depressive disorder, or MDD, bipolar depression, or BPD, treatment resistant depression, or TRD, and schizophrenia. Our most advanced programs are supported by prospectively replicated evidence of clinical activity in biomarker-characterized populations.

Our clinical-stage product candidates are being advanced based on extensive preclinical and clinical data that suggest the potential to bring significant improvements to patient populations not adequately treated with current standard-of-care medications.

Our pipeline of clinical-stage product candidates is depicted below:

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Our Product Candidates

ALTO-100

We are currently evaluating ALTO-100 in a Phase 2b trial in patients with BPD in which patients are assigned to take ALTO-100 as adjunctive treatment to a stable dose of a background mood stabilizing treatment over a six-week treatment period. BPD is associated with memory, cognitive, and neuroplasticity abnormalities at similar or greater rates than seen in MDD. Much like MDD, poor memory and cognition patients typically experience greater treatment resistance and disability, with overall worse outcomes. Moreover, the only currently approved therapies are antipsychotics. We believe the pro-neuroplasticity mechanism of ALTO-100 has the potential to address the high unmet need in this important patient population. Enrollment in this trial is ongoing, with a target of approximately 200 patients, and we expect to report topline data from the study in the second half of 2026.

In the fourth quarter of 2024, we completed the Phase 2b trial evaluating ALTO-100 as a treatment for MDD. The clinically meaningful signal in the adjunctive subgroup and the evidence of biomarker enrichment in the compliant subset of patients support the ongoing Phase 2b trial of ALTO-100 as an adjunctive treatment in BPD.

ALTO-300

ALTO-300, also known as agomelatine, is an oral, small molecule designed to act as a melatonin agonist and 5-HT2C antagonist, and is being developed at 25mg as an adjunctive treatment in the United States for patients with MDD, characterized by an EEG biomarker. Agomelatine is an approved antidepressant medication in Europe and Australia, at both 25mg and 50mg, but has not been approved in the United States. In comparison to the 50mg dose of agomelatine, the 25mg dose has been shown to have equivalent antidepressant efficacy and has not been associated with reversible, low liver enzyme elevations observed with the 50mg dose.

We are currently evaluating ALTO-300 in a double-blind, placebo-controlled, randomized Phase 2b clinical trial in patients with MDD characterized by an EEG biomarker signature. We expect to enroll approximately 200 biomarker positive patients in the final analysis sample, which is therefore expected to result in approximately 320 patients enrolled in the study in total (inclusive of biomarker negative patients and patients not included in the final analysis sample as a result of the completed blinded site and patient case review). Patients are randomized to receive either 25mg of ALTO-300 once daily before bedtime, or QHS, or placebo in addition to a background antidepressant, to which they have had inadequate response, over a six-week treatment period. Patients are then enrolled into an eight-week open-label extension in which they receive 25mg QHS of ALTO-300. We selected the 25mg dose of ALTO-300 with the aim to optimize clinical efficacy while balancing safety and tolerability. The primary endpoint in the trial is the change in MADRS score from baseline to week six in the EEG biomarker positive group. We expect to report topline data from this trial in mid-2026.

In February 2025, we announced a favorable outcome from the planned interim analysis for the Phase 2b trial of ALTO-300 as an adjunctive treatment for patients with MDD. The interim analysis resulted in a recommendation to continue the study and increase the biomarker positive sample, which we believe will improve the overall probability of success of this trial. Prior to the interim analysis, a blinded committee conducted an in-depth site and patient eligibility review that resulted in the prospective exclusion of sites and patients from the analysis population. Following the eligibility review, the biomarker positive population in the interim analysis consisted of 87 patients.

In May 2025, we presented additional analyses at the American Society of Clinical Psychopharmacology Annual Meeting (ASCP) Annual Meeting supporting the unique biomarker opportunity for patient stratification and reinforcing the well-established safety and tolerability profile for ALTO-300 in MDD.

ALTO-207

In May 2025, we acquired ALTO-207 (formerly known as CTC-501) from Chase Therapeutics Corporation, or Chase. ALTO-207 is a fixed-dose combination of pramipexole, a dopamine D3-preferring D3/D2 agonist, approved for the treatment of Parkinson’s disease with demonstrated antidepressant effect, and ondansetron, an antiemetic, selective 5-HT3 receptor antagonist. As a fixed-dose combination, ALTO-207 is designed to enable rapid titration and higher dosing by mitigating the dose-limiting adverse events typically experienced with

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pramipexole. ALTO-207 is being developed to address the significant unmet need for patients with TRD. The planned Phase 2b trial of ALTO-207, which is a potentially pivotal study subject to FDA feedback approval, is expected to initiate by mid-2026.

Prior to the acquisition, Chase completed a randomized, placebo-controlled Phase 2a clinical trial evaluating CTC-501 in 32 patients with depression. CTC-501 met the primary and secondary endpoints in this trial, demonstrating statistically significant and clinically meaningful improvements on MADRS compared to placebo. Patients randomized to receive CTC-501 reached a mean dose of 4.1mg per day. CTC-501 was generally well tolerated in the maintenance period of the study with an adverse event rate similar to placebo.

Our acquisition of ALTO-207 was motivated by the PAX-D study conducted by the University of Oxford. Results, which were recently published in The Lancet Psychiatry, showed pramipexole augmentation of antidepressant treatment, at a target dose of 2.5mg, demonstrated a large (Cohen’s d=0.87) reduction in symptoms relative to placebo at 12 weeks, but was associated with a high rate of adverse effects.  We believe the profile of ALTO-207 will enable higher dosing of pramipexole while mitigating the significant rates of nausea and vomiting that have limited its use for depression.

ALTO-203

We are currently evaluating ALTO-203 for the treatment of patients with MDD associated with increased levels of anhedonia. In June 2025, we announced the identification of a patient selection biomarker and positive pharmacodynamic results from our exploratory Phase 2 proof-of-concept, or POC, trial of ALTO-203 in MDD patients with elevated levels of anhedonia. ALTO-203 is a novel, oral, histamine H3 inverse agonist, designed to modulate circuits underlying cognition, wakefulness, and alertness.

The exploratory Phase 2 POC trial, which enrolled 69 patients, was conducted in two sequential, double-blind, placebo-controlled periods. The trial was designed to characterize the pharmacodynamic, pharmacokinetic, safety, and tolerability profile of ALTO-203 across two dose levels compared to placebo in a crossover design and was not powered to detect statistical significance on traditional depression outcome scales (e.g., MADRS).

The profile exhibited by ALTO-203 in the exploratory POC trial demonstrated clear effects on objective measures of attention and wakefulness, with observed improvements linked to changes in the EEG theta/beta ratio—a biomarker indexing cortical arousal and attentional control. This biomarker is FDA-cleared for use alongside clinical evaluation in the diagnosis of attention-deficit/hyperactivity disorder or ADHD, reinforcing its clinical relevance. These findings replicate results from the Phase 1 study in healthy volunteers, where ALTO-203 treatment led to improvements in sustained attention and reductions in the EEG theta/beta ratio. Baseline EEG theta/beta ratio predicted attentional benefits of ALTO-203 in both the Phase 1 study and Phase 2 POC trial. A higher-than-expected placebo response was observed on Bond & Lader measurements, therefore no significant separation of subjective effects between ALTO-203 and placebo were observed.

We plan to report additional results from this exploratory study at a future medical meeting and expect to determine the next development steps for ALTO-203 following the complete analysis of the data set.

ALTO-101

We are currently evaluating ALTO-101 in a Phase 2 POC trial, which consists of a cross-over, double-blind, placebo-controlled, dose-escalating treatment and we expect to enroll approximately 70 adults with schizophrenia between the ages of 21 and 55. ALTO-101 is an investigational brain-penetrant phosphodiesterase 4, or PDE4, inhibitor that we are developing in a novel transdermal formulation for the treatment of Cognitive Impairment Associated with Schizophrenia, or CIAS. Through this unique formulation, ALTO-101 is designed to retain the desired brain effects shown with the oral formulation and avoid tolerability challenges and adverse effects known to be associated with PDE4 inhibitors. The primary endpoint in the study is the effect of ALTO-101 on theta band activity, the EEG measure shown to be best related to CIAS in replicated analyses of large schizophrenia datasets. Objective cognitive performance will also be evaluated. We expect to report topline data from this study in the second half of 2025.

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ALTO-202

We plan to develop ALTO-202, an investigational orally bioavailable antagonist of the GluN2B subunit of the N-methyl-D-aspartate, or NMDA receptor, for the treatment of patients with MDD. We are currently in the process of planning the next phase of clinical development for ALTO-202.

ALTO-208

In May 2025, we acquired ALTO-208 (formerly known as CTC-413) from Chase. ALTO-208 is a fixed-dose combination of pramipexole and aprepitant, an antiemetic, neurokinin-1 (NK-1) receptor antagonist. We plan to develop ALTO-208 for patients with Parkinson’s disease (PD).

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 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.

We have not generated any revenue from product sales and we have incurred recurring losses since our inception. Our net losses were $17.7 million and $32.9 million for the three and six months ended June 30, 2025, respectively. Our net losses were $16.0 million and $29.4 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $171.3 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:

•continue to progress the clinical development of our product candidates, including ALTO-100 and ALTO-300 in ongoing Phase 2b clinical trials, ALTO-101 in ongoing Phase 2 POC trials, as well as ALTO-203, ALTO-207, and ALTO-208;

•advance additional product candidates through clinical development;

•require the manufacture of larger quantities of our product candidates to support future clinical trials or potential commercialization;

•seek marketing authorizations for any of our product candidates that successfully complete clinical development, if any;

•acquire or license other product candidates or technologies;

•make milestone, royalty, or other payments under any current or future license agreements;

•obtain, maintain, protect, and enforce our intellectual property portfolio;

•seek to attract and retain new and existing skilled personnel; and

•add operational, legal, financial and management information systems and personnel to support our product development and clinical execution, as well as to support our transition to a public company.

We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing, and distribution.

As a result, we will need substantial additional funding to support our operating activities as we advance our product candidates through clinical development, seek regulatory approval, and prepare for and, if any of our product candidates are approved, proceed to commercialization. Until such time, if ever, as we can generate substantial revenue from product sales to support our cost structure, we expect to finance our operating activities through a combination of public or private sales of equity, government or private party grants, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all.

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If we are unable to obtain funding, we will be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations. Although we continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.

As of June 30, 2025, we had cash, cash equivalents and restricted cash of $148.1 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 2028. See “—Liquidity and Capital Resources.”

Components of Results of Operations

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for the development of our product candidates and our platform and technology building efforts, which include:

•personnel expenses, including salaries, benefits, and stock-based compensation expense for our employees engaged in research and development functions;

•expenses incurred in connection with the clinical development of our product candidates, including under agreements with clinical sites and contract research organizations, or CROs;

•fees incurred in connection with license agreements and asset acquisitions;

•costs of manufacturing drug product and drug supply related to our current or future product candidates;

•cost of outside consultants engaged in research and development functions;

•expenses related to regulatory affairs; and

•fees for maintaining licenses and other amounts due under our third-party licensing agreements.

We expense research and development costs in the periods in which they are incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks, using information provided to us by our vendors and analyzing the progress of our clinical trials or other services performed. Significant judgment and estimates are made in determining the accrued expense balances at the end of any reporting period.

Research and development activities are central to our business model. We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidates into and through later stage clinical trials, pursue regulatory approval of our product candidates, build our operational and commercial capabilities for supplying and marketing our products, if approved, and expand our pipeline of product candidates.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. Furthermore, product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, conduct of clinical trials, investment in our clinical programs, competition, manufacturing capability, and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion of costs of our research and development projects or if, when, and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved by the FDA and other applicable regulatory authorities.

Our future research and development costs may vary significantly based on factors such as:

•the timing and progress of our clinical development activities;

•the number and scope of preclinical and clinical programs we decide to pursue;

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•the amount and timing of any milestone payment due under an existing, or any future, license or collaboration agreement or asset acquisition;

•the number of patients that participate in our clinical trials, and per participant clinical trial costs;

•the number and duration of clinical trials required for approval of our product candidates;

•the number of sites included in our clinical trials, and the locations of those sites;

•delays or difficulties in adding trial sites and enrolling participants in our clinical trials;

•patient drop-out or discontinuation rates;

•potential additional safety monitoring requested by regulatory authorities;

•the phase of development of our product candidates;

•the efficacy and safety profile of our product candidates;

•the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;

•maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates;

•changes in the competitive outlook;

•the extent to which we establish additional strategic collaborations or other arrangements; and

•the impact of any business interruptions to our operations or to those of the third parties with whom we work.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

We also expect to incur significant manufacturing costs as our contract manufacturing organizations, or CMOs, develop scaled commercial manufacturing processes. However, we do not believe that it is possible at this time to accurately project expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development, and administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting, information technology, auditing, tax and consulting services, travel expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

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 (including legal costs related to the stockholder litigation described in “Part II, Item I. Legal Proceedings,” below), 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.

Other Income (Expense)

Other income (expense) consists primarily of interest income on our cash and cash equivalents, interest expense on borrowings under our loan and security agreement, loss on debt extinguishment, and non-cash changes in the fair value of our Convertible Grant Agreement with Wellcome (See “— Liquidity and Capital Resources”) and our preferred stock

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warrant liability. In February 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 10 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.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024 (in thousands):


	Three months ended June 30,
	2025		2024


Operating expenses:
Research and development	$	13,124	$	13,184
General and administrative	5,558		5,157
Total operating expenses	18,682		18,341
Loss from operations	(18,682)		(18,341)
Other income (expense):
Interest income	1,683		2,658
Interest expense	(646)		(347)
Other, net	(61)		—
Total other income, net	976		2,311
Net loss	$	(17,706)	$	(16,030)

Research and Development Expenses

The following table summarizes our research and development expenses by program for the periods presented (in thousands):


	Three months ended June 30,
	2025		2024


Direct external program expenses:
ALTO-100	$	1,501	$	2,116
ALTO-300	653		1,541
ALTO-101	893		942
ALTO-203	599		865
ALTO-207	358		—
Other clinical development	309		679
Asset acquisition and license fees	2,956		2,004
Internal and unallocated expenses:
Personnel-related costs	5,070		4,406
Other unallocated expenses	785		631
Total research and development expenses	$	13,124	$	13,184

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Research and development expenses were $13.1 million for the three months ended June 30, 2025, compared to $13.2 million for the three months ended June 30, 2024. Current period activity varied from prior year activity as follows:

•a decrease of approximately $0.6 million related to ALTO-100 primarily driven by the completion of the Phase 2b trial in MDD, in the fourth quarter of 2024;

•a decrease of approximately $0.9 million related to ALTO-300 primarily driven by patient enrollment timing in the ongoing Phase 2b trial in MDD; and

•a decrease of $0.3 million related our Phase 2 POC clinical trial of ALTO-203 which completed during the three months ended June 30, 2025.

The above decreases in research and development expenses were offset by:

•an increase of approximately $1.0 million due to acquisition fees paid in connection with the Chase asset acquisition during the three months ended June 30, 2025 compared to amounts paid during the three months ended June 30, 2024 in connection with development milestones achieved under licensing agreements covering ALTO-101 and ALTO-203; and

•an increase of approximately $0.7 million in salary and personnel related costs during the three months ended June 30, 2025 due to increased headcount as well as $0.2 million of severance costs and $0.1 million of non-cash stock-based compensation.

General and Administrative Expenses

General and administrative expenses were $5.6 million for the three months ended June 30, 2025, compared to $5.2 million for the three months ended June 30, 2024. The increase of $0.4 million was primarily due to an increase in salary and personnel-related costs, which includes an increase in severance of $0.2 million.

Other Income (Expense)

Other income, net decreased $1.3 million in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The decrease was primarily due a decrease in interest income of $1.0 million and an increase in interest expense of $0.3 million.

Comparison of the Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024 (in thousands):


	Six months ended June 30,
		2025		2024

Operating expenses:
Research and development		$	23,098	$	23,136
General and administrative		11,260		9,591
Total operating expenses		34,358		32,727
Loss from operations		(34,358)		(32,727)
Other income (expense):
Interest income		3,510		4,216
Interest expense		(1,244)		(693)
Other, net		(102)		(243)
Loss on debt extinguishment		(681)		—
Total other income, net		1,483		3,280
Net loss		$	(32,875)	$	(29,447)

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Research and Development Expenses

The following table summarizes our research and development expenses by program for the periods presented (in thousands):


	Six months ended June 30,
		2025		2024


Direct external program expenses:
ALTO-100		$	2,625	$	4,323
ALTO-300		1,575		2,657
ALTO-101		1,862		1,348
ALTO-203		1,336		1,485
ALTO-207		358		—
Other clinical development		609		1,082
Asset acquisition and license fees		2,961		2,028
Internal and unallocated expenses:
Personnel-related costs		10,163		8,759
Other unallocated expenses		1,609		1,454
Total research and development expenses		$	23,098	$	23,136

Research and development expenses were $23.1 million for the six months ended June 30, 2025, compared to $23.1 million for the six months ended June 30, 2024. Current period activity varied from prior year activity as follows:

•a decrease of approximately $1.7 million related to ALTO-100 primarily driven by the completion of the Phase 2b trial in MDD in the fourth quarter of 2024; and

•a decrease of approximately $1.1 million related to ALTO-300 primarily driven by patient enrollment timing in the ongoing Phase 2b trial in MDD.

The above decreases in research and development expenses were offset by:

•an increase of approximately $0.5 million related to our Phase 2 POC trial of ALTO-101, which began in 2024;

•an increase of approximately $1.0 million due to acquisition fees paid in connection with the Chase asset acquisition during the six months ended June 30, 2025 compared to amounts paid during the six months ended June 30, 2024 in connection with development milestones achieved under licensing agreements covering ALTO-101 and ALTO-203; and

•an increase of approximately $1.4 million in salary and personnel related costs due to increased headcount as well as $0.1 million of non-cash stock-based compensation.

General and Administrative Expenses

General and administrative expenses were $11.3 million for the six months ended June 30, 2025, compared to $9.6 million for the six months ended June 30, 2024. The increase of $1.7 million was primarily due to the following:

•an increase of approximately $0.7 million in salary and personnel-related costs; and

•an increase of approximately $1.0 million in professional fees and other expenses.

Other Income (Expense)

Other income, net decreased $1.8 million in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The decrease was primarily due to a decrease in interest income of $0.7 million, an increase in interest expense of

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$0.6 million and an increase in expense of $0.7 million related to debt extinguishment costs ($0.4 million of which was non-cash) for our Amended Term Loan.

Liquidity and Capital Resources

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. We have not yet commercialized any of our product candidates, which are in various phases of development, and we do not expect to generate revenue from sales of any of our product candidates for several years, if at all. As we progress through the phases of development, we anticipate that we will incur increasing losses in future quarters and years compared to historical periods. To date, we have funded our operations primarily through the aggregate net proceeds from equity financings (including from our IPO and pre-IPO sales of our convertible preferred stock) and borrowings under our loan and security agreement.

As of June 30, 2025 and December 31, 2024, we had cash, cash equivalents and restricted cash of $148.1 million and $168.7 million, respectively.

Amended Loan and Security Agreement

In December 2022, we entered into a Loan and Security Agreement, or the Original Loan Agreement, with K2 HealthVentures LLC as a lender, the other lenders party thereto (collectively, the Lenders), K2 HealthVentures LLC, or the Administrative Agent, and Ankura Trust Company, LLC, as collateral agent for the Lender. In January 2025, we entered into an amendment to the Original Loan Agreement (the Amendment, and the Original Loan Agreement as amended thereby, the Amended Loan Agreement) to, among other things, extend the maturity date of the facility and increase the maximum available amount of term loans. The Amended Loan Agreement provides for term loans, which we refer to collectively as the Term Loan, in an aggregate principal amount of up to $75.0 million consisting of:

•a first tranche term loan of $20.0 million;

•second tranche term loans of up to $30.0 million in the aggregate available at our request until December 15, 2025, subject to certain time-based, clinical milestones; and

•third tranche term loans of up to $25.0 million in the aggregate available at our request subject to the Lender’s approval.

We drew $20.0 million upon entry into the Amendment (approximately $10.0 million of which was used to refinance obligations under the Original Loan Agreement and pay fees and expenses incurred in connection with the Amendment). A portion of the second tranche term loans is tied to the timing of data from our Phase 2b study of ALTO-300; based on expected timing of top line data for this study, we anticipate that $20.0 million of the second tranche term loans will expire without being drawn.

As of December 31, 2024, we had an outstanding principal balance of $10.0 million under the Original Loan Agreement. As of June 30, 2025, we had an outstanding principal balance of $20.0 million under the Amended Loan Agreement.

The Amended Loan Agreement has a Term Loan maturity date of January 1, 2029, or the Amended Term Loan Maturity Date. The Amended Loan Agreement provides for an interest only period until January 1, 2027, following which the Term Loan shall be repaid in equal monthly payments through the Amended Term Loan Maturity Date.

We were obligated to pay the Lender a one-time facility fee of $0.3 million upon entry into the Amendment. We are also obligated to pay a funding fee on each third tranche term loan in an amount equal to the sum of 0.5% multiplied by the amount of such third tranche term loan, if and when funded. Our obligation under the Original Loan Agreement to pay the Lender a one-time fee of $0.6 million, or the Original Exit Fee, remains outstanding. We are also obligated to pay a final fee equal to 5.95% of the aggregate amount of the Term Loan funded thereunder, or the Amended Exit Fee, upon the earliest of (i) the Amended Term Loan Maturity Date, (ii) the acceleration of the Term Loan, and (iii) the prepayment of the Term Loan.

We have the option to prepay all, but not less than all, of the Term Loan prior to the Amended Term Loan Maturity Date, which would require that we pay the Lender a prepayment penalty fee based on a percentage of the outstanding principal balance and the funding date of the individual tranches thereunder. As to each such tranche under the Term Loan, such fee

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shall be equal to 3% if the payment occurs on or before 24 months after the funding date of such tranche, 2% if the prepayment occurs more than 24 months after, but on or before 36 months after the funding date of such tranche, or 1% if the prepayment occurs more than 36 months after the funding date of such tranche. No prepayment penalty fee is required if the applicable tranche is prepaid within six months prior to the Amended Term Loan Maturity Date or refinanced with the Lender.

Following an initial period with no financial covenants, beginning January 1, 2026, we must maintain, at all times, a cash runway of at least five months, provided that this covenant will be waived during any period in which our market capitalization exceeds $700.0 million. The Term Loan is secured by substantially all of our assets, excluding intellectual property.

Additionally, under the terms of the Amended Loan Agreement, the Lender may, at its option, elect to convert up to $9.0 million of the then outstanding Term Loan ($4.0 million of which was reflected in the Original Loan Agreement and $5.0 million of which is reflected in the Amendment) into shares of our common stock.

Convertible Grant Agreement

In July 2024, we entered into a convertible loan agreement, or the Convertible Grant Agreement, with Wellcome. The Convertible 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. As of June 30, 2025, we had drawn $2.0 million under the Convertible Grant Agreement, and the remainder will be funded upon draw down of payments following the completion of certain milestones as set forth in the Convertible Grant Agreement, subject to certain conditions described therein, which may or may not be achieved. In addition to the funds that we have drawn down as of June 30, 2025, we have achieved clinical milestones that allow us to draw down an incremental $3.0 million under the Convertible Grant Agreement.

We may use proceeds from the Convertible Loan solely to advance development of ALTO-100 in bipolar depression. In addition, if we do not exploit or develop ALTO-100 (other than for safety or efficacy concerns) within a specified period following the completion of our Phase 2b clinical trial evaluating ALTO-100 in patients with bipolar depression, the Convertible Grant Agreement provides Wellcome with a limited right to exploit ALTO-100, solely in bipolar depression, subject to a revenue share between Wellcome and us of any proceeds arising from Wellcome’s exploitation. 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 Convertible 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 Convertible 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 Convertible Grant Agreement. At any time after the fifth anniversary of the date of the Convertible 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.

Shelf Registration Statement and Sales Agreement

On February 3, 2025, we filed a shelf registration statement on Form S-3 with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof up to a total aggregate offering price of $300.0 million. We also simultaneously entered into a Sales Agreement, or the Sales Agreement, with Leerink Partners LLC, or the Sales Agent, pursuant to which we may issue and sell, from time to time at our discretion,

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shares of our common stock having an aggregate offering price of up to $75.0 million through or to the Sales Agent. No shares of common stock have been issued and sold to date pursuant to the Sales Agreement.

Cash Flows

The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):


	Six months ended June 30,
		2025		2024


Net cash used in operating activities		$	(30,335)	$	(22,677)
Net cash used in investing activities		(24)		(564)
Net cash provided by financing activities		9,740		134,325
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(25)		(10)
Net (decrease) increase in cash, cash equivalents and restricted cash		$	(20,644)	$	111,074

Operating activities

Net cash used in operating activities was $30.3 million for the six months ended June 30, 2025, as compared to $22.7 million for the six months ended June 30, 2024. The increase in cash used was the result of: increased net losses of $3.4 million, timing of bonus payments, and a decrease in non-cash expenses in 2025 primarily related to achievement of a milestone under a developmental license agreement. The increase in cash used in operating activities was partially offset by recognition of a non-cash loss on debt extinguishment related to the Amended Loan Agreement.

Investing activities

The net cash used in investing activities for the six months ended June 30, 2025 was negligible.

Net cash used in investing activities was $0.6 million for the six months ended June 30, 2024, for corporate and clinical trial related capital expenditures, specifically EEG machines utilized in our clinical trials.

Financing activities

Net cash provided by financing activities was $9.7 million for the six months ended June 30, 2025, primarily related to the net increase in borrowings under our Amended Loan Agreement as well as the drawdown of $0.8 million under our Convertible Grant Agreement.

Net cash provided by financing activities was $134.3 million for the six months ended June 30, 2024, primarily related to the issuance of 9,246,000 shares of common stock in our IPO at a price to the public of $16.00 per share, offset by $3.2 million of other offering expenses paid during the six months ended June 30, 2024.

Future Funding Requirements

We believe that our existing cash and cash equivalents of $147.6 million, together with anticipated proceeds under our Convertible Grant Agreement with Wellcome Trust, will be sufficient to fund our operating expenses and capital expenditure requirements into 2028. This estimate reflects both our prioritization efforts to improve operating efficiency, including reducing headcount in May 2025 which resulted in short-term severance costs, and our re-deployment of long-term savings toward new programs such as ALTO-207 and ALTO-208. 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.

We will need substantial additional capital to develop our product candidates and fund operations for the foreseeable future. Our future capital requirements will depend on many factors, including:

•the scope, timing, rate of progress, and costs of our clinical trials for our current and any future product candidates;

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•the number and scope of clinical programs we decide to pursue;

•the cost, timing, and outcome of preparing for and undergoing regulatory review of our current and any future product candidates;

•the cost and timing of manufacturing our product candidates;

•the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending intellectual property-related claims;

•the terms and timing of establishing and maintaining collaborations, licenses, and other similar arrangements;

•the timing of any milestone and royalty payments to our existing or future suppliers, collaborators, or licensors;

•our efforts to enhance operational systems and our ability to attract, hire, and retain qualified personnel, including personnel to support the development of our product candidates;

•the costs associated with being a public company;

•the extent to which we acquire or in-license other product candidates and technologies;

•the extent to which we enter into licensing or collaboration arrangements for any of our programs; and

•the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution of our product candidates, if they receive marketing approval.

Until such time, if ever, as we can generate substantial revenue from product sales to support our cost structure, we expect to finance our cash needs through the public or private sale of equity, government or private party grants, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute the ownership interests of our stockholders. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings on acceptable terms when needed, we may be required to delay, limit, reduce, or terminate our drug development or future commercialization efforts or grant rights to develop and market our current or any future product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

Contractual Obligations and Commitments

In addition to ongoing needs to fund our operations, our material cash requirements as of June 30, 2025 consist primarily of obligations under both our Amended Loan Agreement (see Note 4 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report) and our lease commitment of $7.1 million for our headquarters office space located in Mountain View, California with an initial lease term of 65 months that terminates in March 2030. If the Company elects to terminate the lease after the third lease year, including payments already made, the Company will make payments of approximately $4.0 million over the term of the lease.

In July 2024, we entered into the Convertible Grant Agreement with Wellcome. The Convertible 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 has been funded as of June 30, 2025, and the remainder of which will be funded upon draw down of the remaining initiation payment or the completion of certain milestones as set forth in the Convertible Grant Agreement, subject to certain conditions described therein. For additional information regarding the Convertible Grant Agreement, see Note 4 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

We enter into contracts in the normal course of business with clinical trial sites and clinical supply manufacturers and with vendors for preclinical studies and clinical trials, research supplies, and other services and products for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, we believe that our non-cancelable obligations under these agreements are not material.

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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.

We are also party to certain collaboration and license agreements, which contain a number of contractual obligations. Those contractual obligations may entitle us to receive, or may obligate us to make, certain payments. The amount and timing of those payments are unknown or uncertain as we are unable to estimate the timing or likelihood of the events that will obligate those payments. We have milestones, royalties, and/or other payments due to third parties under our existing license agreements. For additional information concerning these agreements, which are described below, including a detailed description of the financial terms, please see Note 6 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, Note 10 to our audited consolidated financial statements included in our Annual Report and the section titled “Business— License and Other Agreements” in our Annual Report.

License Agreement with Stanford University

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.

License Agreement with Sanofi

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.

License Agreement with Cerecor

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.

Teva Asset Purchase Agreement

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. 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 and six months ended June 30, 2024.

Palisade Asset Purchase Agreement

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,

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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.

License Agreement with MedRx

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. In April 2024 we achieved a milestone under the MedRx Agreement and paid MedRx $0.8 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.

Chase Asset Purchase Agreement

On May 31, 2025, we entered into an asset purchase agreement, or Chase Agreement, with Chase Therapeutics Corporation, or Chase, to acquire all patent, know-how and other rights to ALTO-207, ALTO-208, and certain related assets. For a detailed description of the financial terms of the Chase Agreement, see Note 6 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Other than as described above, 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, 2025.

Critical Accounting Policies and Significant Judgments and Estimates

There were no material changes to our critical accounting policies that are disclosed in our audited consolidated financial statements for the year ended December 31, 2024 filed with the SEC on March 20, 2025.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the JOBS Act, and we may remain an emerging growth company for up to five years following the completion of our IPO. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in our Annual Report, we provided only two years of audited financial statements and did not include all of the executive compensation-related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period, and therefore, we are not subject to the same requirements to adopt new or revised accounting standards as other public companies that are not emerging growth companies; however, we may adopt certain new or revised accounting standards early. We would cease to be an “emerging growth company” upon the earliest to occur of: (i) the last day of the fiscal year in which we have $1.235 billion or more in annual revenue; (ii) the date on which we first qualify as a large accelerated filer under the rules of the SEC; (iii) the date on which we have, in any three-year period issued more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of our IPO (December 31, 2029).

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We are also a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

Information pertaining to legal proceedings can be found in Part I of this Quarterly Report under “Item 1. Financial Statements - Note 11. Commitments and Contingencies” and is incorporated by reference herein.

In addition, from time to time, we may be involved in legal proceedings arising in the ordinary course of business. We are not presently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm.

Item 1A. Risk Factors.

In addition to the risks described in our Annual Report, you should carefully consider the other information set forth in this Quarterly Report and the information in our other filings with the SEC, as they could materially affect our business, financial condition or future results of operations. There have been no material changes to the risk factors previously disclosed in “Item 1A. Risk Factors” in our Annual Report other than as set forth below.

We are currently subject to and may be subject to additional future securities class action litigation.

Securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities. For example, on July 21, 2025, a purported stockholder of the Company filed a lawsuit against us, certain executive officers, and certain current and former directors in the United States District Court for the Northern District of California alleging violations of the Securities Act and Exchange Act related to our IPO and subsequent public disclosures. See “Part II, Item 1. Legal Proceedings” in this Quarterly Report for additional information regarding this matter. It is possible that additional lawsuits will be filed, or allegations received from stockholders, with respect to these same or other matters and also naming us and/or our officers and directors as defendants. This litigation could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, results of operations, or financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds from Public Offering of Common Stock

On February 1, 2024, our Registration Statement on Form S-1, as amended (File No. 333-276495) relating to our IPO was declared effective. On February 6, 2024, we closed the IPO and 9,246,000 shares of our common stock were issued and sold at a public offering price of $16.00 per share, inclusive of the exercise in full by the underwriters of their option to purchase up to an additional 1,206,000 shares of common stock.

The aggregate net proceeds from the IPO, after underwriting discounts and commissions, and other offering expenses of $4.6 million, were $133.0 million. There has been no material change in the planned use of proceeds from our IPO as described in our prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on February 5, 2024.

Issuer Purchases of Equity Securities

None

Item 3. Defaults Upon Senior Securities.

Not applicable.

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Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.

Exhibit No.

Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of the Registrant

8-K

001-41944

3.1

2/6/2024

3.2

Amended and Restated Bylaws of the Registrant

8-K

001-41944

3.2

2/6/2024

10.1†#

Asset Purchase Agreement, dated as of May 31, 2025, by and between the Registrant and Chase Therapeutics Corporation

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document.

101.SCH

Taxonomy Extension Schema With Embedded Linkbase Documents

104

Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101).

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† Certain schedules and exhibits to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the U.S. Securities and Exchange Commission upon request

# Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined that the omitted information is (i) not material and (ii) the type of information that the registrant customarily and actually treats as private or confidential.

* This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ALTO NEUROSCIENCE, INC.

Date:	August 13, 2025	By:	/s/ Amit Etkin
			Amit Etkin, M.D., Ph.D. President and Chief Executive Officer

Date:	August 13, 2025	By:	/s/ Nicholas Smith
			Nicholas Smith Chief Financial Officer

Alto Neuroscience, Inc. 10-Q