Dive Brief:
- Boston-based digital therapeutics company Akili Interactive announced Wednesday that it is restructuring its business, including cutting 40% of its staff.
- The company, which currently offers a prescription-based video game treatment to improve attention in children with ADHD, plans to shift to a non-prescription business model. That includes seeking regulatory approval for an over-the-counter label for its products.
- The changes reflect challenges digital therapeutics companies face in winning over payer coverage for their products.
Dive Insight:
Akili said the staff cuts would primarily include its field sales force and market access teams, and would extend its cash runway into the second half of 2025. Earlier this year, the company cut another 46 people.
Most of Akili’s revenues come from prescription sales of its FDA-cleared video game-based treatment for ADHD, called EndeavorRx. The company reported $323,000 in revenue in 2022, a 40% decrease year over year. It reported a $19 million net loss that year.
In June, Akili released an over-the-counter version of Endeavor for adults. It does not have an FDA label for adults yet, but Akili released the game under a pandemic enforcement policy that allows companies to give people access to low-risk, mental health-related digital health devices, even if they haven’t been cleared by the Food and Drug Administration.
The response “surpassed our expectations,” CEO Eddie Martucci said in a statement. “We believe that our shift to a consumer-led model across our business will maximize our reach in the ADHD patient community and allow us to potentially expand into other large markets, without many of the high cost centers of a prescription model.”
Between June and September, the company had more than 4,000 active subscribers who brought in an average revenue of $81.88 per user during the period.
By moving away from an insurance model, the company expects to generate revenues that will support margins between 60% and 70% by late 2025.
“A non-prescription model removes reliance on intermediaries, which we believe will give us more control over our growth and enable us to build a lasting, sustainable business,” Martucci said.
The company plans to submit adult clinical trial data to the FDA later this year for an over-the-counter version of its product for adults, and plans to submit data to the FDA in 2024 to convert its pediatric prescription product to an over-the-counter treatment.
As a result of the changes, Akili expects non-GAAP total operating expenses between $55 million and $60 million for 2023, and between $42 million and $47 million for 2024.