Akili Ditches PDT for OTC & Cuts Workforce by 40%

Prescription digital therapeutics (PDT) company Akili Interactive has decided to transition from a prescription to a non-prescription business model for its FDA-approved EndeavorRX video game-based treatment for ADHD, a reflection of ongoing challenges PDT’s face when vying for insurance coverage.

“Today, we are evolving our business to remove barriers for patients trying to access safe and effective non-drug treatment options,” said Eddie Martucci, CEO and co-founder of Akili, in a statement. “We have the unique ability to offer consumers the same clinically-proven technology as the world’s only FDA-approved prescription video game treatment, with the ease of access and convenience of a consumer tech product. 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.”

As part of the restructuring, Akili announced it will be cutting its staff by 40%. The cuts will eliminate the field sales force and market access team, which accounts for about two-thirds of the reduction. Earlier this year, the company also cut another 46 people. The implementation of the cuts will help extend its cash runaway into the second half of 2025.

In 2022, there was a 40% decrease in revenue year over year ($323,000) with a reported $19 million net loss. However, through the change to non-prescription, Akili said it expects to generate revenues to support margins between 60% and 70% by late 2025.

These estimates in-part come from the company’s release of its over-the-counter (OTC) version of Endeavor for adults in June. While it does not have FDA approval for adults yet, the PDT was released under a pandemic enforcement policy that allows companies to provide individuals with access to low-risk mental health-related digital health devices, even if not cleared by FDA. The company does plan to seek regulatory approval for an OTC label for the product.

The response to the OTC version, Martucci said, “surpassed our expectations.”

“We have seen the non-prescription model play out with EndeavorOTC, which we released in June as a treatment for adults with ADHD,” he said. “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.”

In the first three months on the market (June 6, 2023, to Sept. 5, 2023), EndeavorOTC generated 125,971 first time app downloads, 4,170 active subscribers — defined as active paying users during the three-month period, and $81.88 average revenue per user who paid in the period. Additionally, the app saw 57% of total subscriber sessions were played for the full recommended 25 minutes of therapeutic time, there was a 51%retetion of monthly subscribers after one month and 67% retention after two months, and there was a GAAP revenue and billings of $341,000.

As a result of the changes, Akili said it expects non-GAAP total operating expenses between $55 million and $60 million for 2023 and between $42 million and $47 million for 2024.

The decision to move from the PDT space and enter a non-prescription business model is a departure from what the medical technology industry has seen over the last few years, but may spark an innovative a new pathway for PTD companies facing the challenge of obtaining insurance approval.

This potential new pathway comes after choppy waters for the PDT space over the last year. What some were calling the “next big innovation in medtech” has faded into the shadows as insurance companies continue to deny coverage for PDT products, resulting in the bankruptcy of Pear Therapeutics after undergoing two rounds of layoffs — one in July of 2022 and another in November of 2022. Better Therapeutics also cut 35% of its workforce in March on the cusp of securing an FDA nod for its AspyreRx PDT in July.