Digital therapeutics company Pear Therapeutics is making cuts in nearly all areas of its business, a move that buys the company time as it works to grow revenue for its small slate of commercialized products.
The corporate shakeup will lead to $28 million in savings over the next 18 months, Pear said in a regulatory filing. Cost reductions are focused on the company’s pipeline candidates, discovery programs, and business development. Spared from the axe are Pear’s commercial efforts. The company currently markets three digital products, two for addiction disorders and one for chronic insomnia. These software apps are intended to serve as a treatment, though they can be used alongside medications or therapy.
Boston-based Pear said the restructuring will trim its workforce by 9%, or about 25 employees. The company expects to incur a one-time $900,000 charge, comprised mainly of severance payments. That charge will be recorded in the third quarter of this year. In a research note sent to investors, BTIG analyst Marie Thibault wrote that the effects of the cost-saving moves should become more readily apparent starting in the fourth quarter.
“Given the challenging macroeconomic environment, we are not entirely surprised to see Pear take steps to preserve cash and extend its cash runway and believe it was prudent for management to prioritize commercial efforts,” Thibault said.
Pear’s three commercialized digital therapeutics are prescription-only products. In its release of first quarter 2022 financial results, the company reported more than 9,200 total prescriptions across all three products. Those products accounted for $2.7 million in product revenue in the quarter. Pear makes money by entering agreements with healthcare providers and payers, as well as with state and local governments. The company has been trying to boost revenue by increasing the number of “covered lives,” which means the number of people entitled to benefits under an insurance plan.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Pear finished the first quarter of this year with $89.4 million in cash, according to its financial statements. The company also reported $47.9 million in short-term investments. When Pear closed the merger deal that took the company public late last year, the transaction infused with company with about $175 million. [Paragraph updated to add short term investments.]
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