Digital health firm Pear considers future as cash dwindles

Digital health firm Pear considers future as cash dwindles

Pear Therapeutics already has three FDA-approved prescription digital therapeutics (DTx) on the market – but it seems that isn’t enough to ensure a stable financial position in the current digital health market.

The company has announced that it is seeking “strategic alternatives” for the business that could include a sale, merger or licensing out of its DTx assets. It also said it would no longer hold a fourth-quarter results call while the review of the business plays out.

Signs that things were not all well at Pear emerged in its third-quarter results, when the firm announced it was cutting 22% of its workforce – around 59 employees – in order to trim almost $11 million off its expenses in 2023 as it tries to build sales of its DTx products for insomnia and substance use disorders. It also narrowed its business focus in response to a “challenging macroeconomic environment.”

The decision strikes at the heart of the key problem facing companies operating in the digital health sector – creating and maintaining a reimbursable market for their products even after proving to the FDA that they offer a clinical benefit.

Pear recorded revenues of just over $4 million in the third quarter and said it was hoping for $14 to $16 million for full-year 2022, rising to $27 to $37 million in 2023 – forecasts which have now been withdrawn.

The company ended the period with around $60 million in cash or equivalents, down from almost $160 million at the end of third quarter 2021.

The company has engaged investment bank MTS Health Partners to help it look into its options but cautioned there was “no set timetable for this process, and there can be no assurance that this process will result in the company pursuing a transaction.”

It also said that if no transaction is forthcoming, it may be forced to “seek a reorganisation, liquidation, or other restructuring.” In January, it filed a $300 million fundraising prospectus with the Securities & Exchange Commission (SEC), looking to shore up its finances, but that hasn’t come to anything.

Shares in Pear lost more than a third of their value following the announcement, driving its market capitalisation down below $55 million – a far cry from its valuation of around $1.6 billion when it made its debut on the Nasdaq in 2021 through a merger with special purpose acquisition company (SPAC) Thimble Point.