With three FDA-cleared products on the market, and many more in its pipeline, Pear Therapeutics has solved one of the early puzzles of digital therapeutics: getting the green light from regulators for its software to be prescribed as a treatment.
Now, the Boston-based startup is making plans to go public as it figures out the next big hurdle: how to monetize it.
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Pear struck a deal to merge with special-purpose acquisition company (SPAC) Thimble Point Acquisition Corp. that would value the startup at $1.6 billion.
“We just see a massive opportunity before us. Pear has the first three prescription digital therapeutics and over the balance of last year saw another three assets added to the space,” Pear CEO Corey McCann said in a Zoom interview. “We think it’s an interesting time for this new modality.”
These SPAC deals, which have resurfaced in the last two years, involve taking a shell company public that then acquires a “target” startup. Pear, an early player in the market for prescription digital therapeutics, is an interesting target.
In the last four years, it has gotten FDA clearance for app-based treatments for substance use disorder, opioid use disorder, and most recently, insomnia. Unlike most other digital health apps, the use of the software itself is intended to serve as a treatment, though it may be paired with medications or therapy.
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Like a medication, these app-based treatments must be prescribed by a physician, which poses new challenges. Pear, and its peers, are also looking for more insurers and health plans to include their therapeutics as a covered benefit.
So far, Pear has drummed up coverage from 15 different health plans accounting for 28 million covered lives, including self-insured companies, PBMs, and Medicaid plans in three states. McCann said he was happy with the company’s progress so far, considering it was not covered by any a year ago.
But its revenue numbers still show a challenge in getting therapeutics to patients. By the end of 2021, Pear expects to bring in just $4 million in revenue, according to an investor presentation. By 2023, the company estimates it will see $125 million in revenue, a projection that McCann said is based on scaling up the number of covered lives. (Unlike in a traditional IPO, startups that go public through a SPAC are allowed to make projections).
Pear would get an influx of cash from the deal, including up to $276 million in funding from Thimble Point and $125 million from private investors. The acquisition is expected to close later this year, after which the combined company would trade on Nasdaq under the stock ticker “PEAR.”
As other companies develop their own digital therapeutics, McCann hopes to use Pear’s existing infrastructure to build out a broader platform for digital therapeutics. For example, last year, the FDA cleared the first video game treatment for ADHD, and it more recently cleared a software tool to help clinicians diagnose autism in young children.
Pear has built out a system including a patient service center, a dashboard for healthcare providers and claims processing for insurers.
“We also see an opportunity to be a horizontal platform for our assets and other companies’,” McCann said. “We really see this space playing out in many ways a lot like the EMR where clinicians are working with only one platform.”
Photo credit: Andrey Suslov, Getty
