Pear Therapeutics — which creates clinician-prescribed software to treat behavioral health conditions — is going public by way of a merger with a special purpose acquisition company (SPAC).
The developer of prescription digital therapeutics (PDTs) announced Tuesday that it has entered into a definitive business combination agreement with Thimble Point Acquisition Corp. (Nasdaq: THMA), a blank check company whose management team is associated with the Pritzker Vlock Family Office (PVFO).
The deal represents a pro forma equity value of about $1.6 billion. Plus, it’s expected to generate about $400 million in gross proceeds from a combination of up to $276 million in cash held in Thimble Point’s trust account and a $125 million upsized private investment in public equity from a number of health care and technology investors.
Headquartered in Boston and founded in 2013, Pear develops PDTs for conditions such as substance use disorder (SUD) and insomnia, and it currently has three such products on the market. However, this merger will help Pear expand to add more PDT offerings, expand the availability of its current products and scale its end-to-end platform.
“We see [PDT] as a pervasive therapeutic modality with hundreds of these products to be created,” Pear President and CEO Corey McCann told Behavioral Health Business. “This gives us an opportunity to continue to commercialize our assets in behavioral health, but also to access our pipeline, which currently has another 14 PDT candidates, and to continue to develop PDT after PDT.”
Pear’s solutions are delivered through software applications, using cognitive behavioral therapy (CBT) to treat patients, while simultaneously allowing prescribing clinicians, payers and health systems to track patients’ progress. The solutions are FDA-authorized, clinician-prescribed and payor-reimbursed.
Currently, Pear’s footprint spans 35 states and more than 700 prescribers, with about 15 different insurance organizations covering its services. And that’s just the beginning, according to McCann. Going public will help Pear make its commercial products standard of care, expanding the number of payers covering its services and the number of patients using its PDTs.
“We’re positioned to be able to develop a whole portfolio of assets to cover behavioral health — so in addition to addiction and insomnia, indications like anxiety, depression, bipolar, schizophrenia and PTSD,” McCann said. “Then we also have assets in neurologic conditions, in GI conditions, cardiovascular conditions and oncology.”
He went on to add that Pear didn’t always have its heart set on going public via SPAC, which is a type of company formed specifically with the purpose of buying a business to take it public.
Also called blank check companies, SPACs provide a quicker alternative to the traditional IPO route, which typically requires an organization to go through a long disclosure process, as well as a roadshow to garner financial support from investors before going public.
Instead, McCann said the management team at Thimble Point sold him on the company and made for a good, synergistic fit with Pear. Meanwhile, Thimble Point pointed to Pear’s potential.
“Thimble Point sought to collaborate with a high-growth, tech-enabled company with the potential to disrupt large and established industries,” Elon Boms, CEO and Chairman of Thimble Point Acquisition Corp. and Managing Director of PVFO, said in a press release announcing the merger. “We chose to invest in Pear because we believe it has the opportunity to become the primary commercial platform through which patients and prescribers access PDTs.”
The merger of the two companies is expected to close in the second half of 2021, at which point the combined entity — Pear Holdings Corp. — plans to trade on the Nasdaq under the ticker symbol “PEAR.” Pear’s current management team will stay on and lead the merged company.
Upon closing, Pear Holdings is expected to have about $450 million of net cash on its balance sheet.
SPACs in behavioral health
As of late, SPACs have become especially popular. Already this year, about 350 companies have gone public via SPAC, according to the data and research site SPAC Analytics. That number has already surpassed 2020’s previously record-setting count of 248.
The virtual mental health provider Talkspace is among the hundreds of companies to go public via SPAC this year — and one of the first to do so in behavioral health. Talkspace initially announced the news back in January and is set to begin trading on the Nasdaq on June 23 under the stock ticker TALK.
After news of the Talkspace deal broke, experts speculated that the behavioral health industry could see more companies go public via SPAC.
“Behavioral health is something that the pandemic has pushed mostly online,” Diego Arias — a health care ventures analyst for the innovation platform Plug and Play Tech Center — previously told Behavioral Health Business. “If more companies were to go public via SPAC, I think it would be great for the visibility, not only with behavioral health, but also for … the wider digital health ecosystem.”
Before this year, behavioral health lacked many public companies, with Acadia Healthcare (Nasdaq: ACHC) and Universal Health Services (NYSE: UHS) being the only two in that category. Previously, American Addiction Centers (AAC) was also publicly traded, but the New York Stock Exchange delisted it in 2019 after AAC’s stock fell below the NYSE’s continued listing standard.
While Pear doesn’t consider itself a behavioral health company specifically, its mandate is to help those providers do their job better, allowing them to deliver superior outcomes and improve access to behavioral health treatment, McCann said.
“We really think that there’s a tremendous opportunity to educate providers as prescribers — and to enhance their reach, enhance their efficiency and to generate billable encounters on the basis of interacting with our dashboards,” he added.