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. Other than as set forth below, the Company had no significant pending or threatened litigation as of December 31, 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 plaintiff filed an amended complaint on January 23, 2026. The complaint is a putative class action alleging violations of the Securities Act related to the Company’s IPO in February 2024, and violations of the Exchange Act thereafter. The proposed classes consist 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 March 18, 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.
In addition, a consolidated stockholder derivative action, captioned In re Alto Neuroscience, Inc. Derivative Litigation, Lead Case No. 5:25-cv-07144-NW was filed on behalf of the Company against certain executive officers and certain current and former directors for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of the federal securities laws. The claims arise out of the same factual allegations as the putative class action described above. The plaintiffs seek unspecified damages, as well as interest, fees, and costs. The consolidated stockholder derivative action was stayed on January 14, 2026 pending resolution of the motion to dismiss in the securities class action. The Company believes that these claims lack merit.
The Company has not recorded a liability related to these lawsuits 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 December 31, 2025. The Company does not anticipate recognizing any significant losses relating to these arrangements.