Cut to the core: Prescription app developer Pear Therapeutics files for bankruptcy, lays off staff

Pear Therapeutics, which planted some of the earliest seeds that prescription smartphone apps could stand alongside prescription drugs, has failed to bear fruit. The company filed for Chapter 11 bankruptcy and announced it would lay off more than 90% of its employees as it seeks a buyer.

The 2018 Fierce Medtech Fierce 15 winner had developed three prescription digital therapeutics that passed FDA muster—including the agency’s first in the field, with a de novo clearance for Pear’s reSET program, designed for people receiving treatment for substance abuse disorders.

Cognitive behavioral therapy apps targeting opioid use disorder and insomnia would follow—as would partnerships with pharma companies like Novartis, Sandoz and others looking to explore digital apps as a potential companion to their own offerings. Meanwhile, Pear aimed to validate its efforts using the same clinical trial endpoints employed by large drugmakers.

And before going public in late 2021, through a $1.6 billion SPAC deal, the company had raised tens of millions in private backing from the likes of SoftBank Vision Fund, among other investors. 

But according to Pear’s founder and CEO, Corey McCann, the company still had a large hill to climb when it came to securing insurance reimbursements—and therefore, revenue—for its products.

“We’ve shown that clinicians will readily prescribe PDTs,” McCann wrote in a LinkedIn post. “We’ve shown that patients will engage with the products. We’ve shown that our products can improve clinical outcomes. We’ve shown that our products can save payors money. Most importantly, we’ve shown that our products can truly help patients and their clinicians. 

“But that isn’t enough,” he wrote. “Payors have the ability to deny payment for therapies that are clinically necessary, effective, and cost-saving. In addition, market conditions over the last two years have challenged many growth-stage companies, including us.”

Pear had also faced skeptics at the Institute for Clinical and Economic Review, the drug pricing watchdog known as ICER, which said in 2020 that it was unable to find strong evidence that smartphone apps for opioid use—including Pear’s reSET-O, among others—could provide extended benefits over periods spanning multiple years.

At the time, ICER said it only had enough data to model the cost-effectiveness of Pear’s app for a three-month course of outpatient therapy, prescribed in combination with buprenorphine. The program’s price of about $1,200 fell within an acceptable range set by ICER.

Pear responded with real-world data showing that among those who completed the recommended number of modules in the first month, 88.1% passed drug screenings and 85.8% remained in active treatment through the final month of the regimen. Pear also linked reSET-O with fewer hospital admissions, including fewer intensive care unit, emergency room and clinic visits.

That same year, in the midst of the COVID-19 pandemic, the company aimed to take its prescription app for chronic sleeplessness direct-to-the-patient. Through its PearConnect telehealth model, the company hoped to reach the estimated 30 million people in the U.S. with insomnia, and virtually place them with prescribing physicians and case workers. Pear’s Somryst app also received a Prix Galien USA award for best digital health product.

But now, in an SEC filing last week, Pear disclosed it would let go about 170 of its full-time employees—“including me,” noted McCann—while a transition team of about 15 will stay on to shepherd the company through the Chapter 11 process as it looks to auction off its remaining assets.

Things began looking dire last month when Pear announced it had begun exploring “strategic alternatives” for its future—including licensing agreements or the outright sale of its tech, as well as potential M&A transactions and additional fundraising attempts. 

Prior to that, Pear looked to cut costs by reducing its headcount, including two waves of layoffs across the latter half of 2022 totaling about 85 employees, even while it secured coverage from some U.S. insurers

The company had started that year with sunnier predictions, including the goal of quintupling its net revenue to about $22 million—and showed that it was on track during the first quarter, though it would later shrink its financial forecasts.

“This is certainly not the outcome I envisioned when I founded Pear in 2013 … I want to personally thank each and every one of our employees for all that they’ve done for Pear and for patients,” McCann wrote. “Here’s to the future of digital medicine that we’ve worked so hard to create.”