Prescription digital therapeutics company Akili, Inc. (Nasdaq: AKLI) announced another workforce reduction, terminating nearly half of its remaining employees.
The layoffs, which amount to 46% of Akili’s workforce, will eliminate the company’s marketing and medical affairs teams, according to publicly available documents. The restructuring, which is estimated to cost between $2.3 and $2.8 million including severance costs, is expected to be completed by the end of the second quarter of 2024.
This is the company’s third round of significant layoffs in less than a year and a half.
In September 2023, Akili announced it would lay off 40% of its staff, primarily in its field sales force and market access teams.
In January 2023, the company made plans to lay off 46 employees, equivalent to 30% of its workforce.
The two 2023 layoffs were driven by the economic environment and the company’s strategic shift towards a user subscription-based model, moving away from its previous prescription-focused approach.
Akili did not respond to Behavioral Health Business’s request for comment by the time of publication.
The news of the most recent workforce cut coincided with the announcement of another strategic shift.
Akili revealed that its board would evaluate several strategic options and alternatives in an attempt to maximize shareholder value.
“There can be no assurance that this process will result in Akili pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms, if at all,” the filing read.
The company also announced an amendment to its deal with Japan-based global pharmaceutical company Shionogi & Co, which includes Shionogi’s forgiveness of a $5 million long-term debt obligation, an upfront payment of $10.5 million and the potential for an additional $4.5 million.
Boston, Massachusetts-based Akili’s digital therapeutic product EndeavorRx, which treats pediatric ADHD, received FDA clearance in 2020. The product operated through a video game experience and was designed to improve attention function in children ages 8 to 12.
The company offers a version of the therapeutic designed for adults, called EndeavorOTC, which also employs a gamified approach and is currently under FDA review.
Akili will make its products available for purchase and will continue to support current users of its products.
Akili is not the first digital therapeutics company to suffer financially. Pear Therapeutics, the first company to receive an FDA de novo clearance for a digital therapeutic, filed for bankruptcy in April 2023.
Pear’s demise likely cooled investor interest in digital therapeutics, according to the latest Pitchbook digital health report. Still, there was “a decent share of transactions” in the digital therapeutics space in 2023, the report’s authors wrote.
Notably, digital therapeutics company BehaVR merged with Fern Health, a virtual chronic pain management company.
Pitchbook analysts anticipate an uptick in consolidations in digital therapeutics companies in 2024. In line with this prediction, digital health care company Dario, which offers behavioral health care, acquired technology company Twill in February.
Other players in the digital therapeutics space are still hoping to find success, despite Pear’s failure and Akili’s struggles.
Princeton, New Jersey-based Curio Digital recently announced that the Food and Drug Administration (FDA) granted 510(k) clearance to its prescription digital therapeutic designed to treat postpartum depression.
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