Pear pulped: Digital therapeutics maker's assets sold for $6M at auction after bankruptcy filing

Less than two years after Pear Therapeutics went public in a SPAC deal worth $1.6 billion—which in turn came after the digital therapeutics maker had raised more than $400 million in venture capital—its assets were sold in an auction this week for just over $6 million.

In its decade-long lifetime, Pear had developed a range of apps that were designed to help treat addiction, insomnia, PTSD, chronic pain, irritable bowel syndrome and more. In 2017, its substance use disorder program, reSET, became the first-ever digital therapeutic to receive FDA clearance.

Those once-high-flying assets were split between four bidders in Thursday’s auction, according to a court filing (PDF); their purchases still have to be approved in a hearing scheduled for Monday. Stat was first to report the news of Thursday’s auction.

Click Therapeutics—itself a developer of apps to help treat migraine, smoking cessation, depression and more—offered $70,000 for the patents behind the Pear Platform for digital therapeutic development, sans those related to the company’s Invention Science Fund, or ISF.

The ISF licenses and patents went to Harvest Bio, which also won the bids for Pear’s assets related to schizophrenia, multiple sclerosis, depression and other pipeline projects as well as its corporate trademarks, its PearConnect commercial platform and the rights to the reSET and opioid-specific reSET-O programs, all for a total of $2.03 million.

Sleep-focused company Nox Health Group offered the largest bid of the group—$3.9 million—solely to acquire the assets related to Somryst, Pear’s FDA-cleared insomnia treatment, while digital health maker Welt doled out $50,000 for Pear’s migraine-focused program.

Pear was set to be sliced up and put on the market after it filed for bankruptcy last month following a rocky tenure as a publicly traded company that included multiple waves of layoffs and steadily mounting costs.

In 2021, Pear recorded expenses of nearly $110 million but revenues of only $4.2 million. Though it kicked off 2022 with dreams of quadrupling its revenues, by the time its third-quarter earnings report went live last fall, the company had slashed those forecasts almost in half and seen its yearly expenses already surpass the $100 million mark. Ultimately, according to its 2022 annual report, Pear raked in revenues of about $12.7 million while racking up total expenses of more than $136 million for the year.

Despite its optimism in late 2022 that 2023 would bring revenues of more than $27 million, as its sales continued to underperform, in March of this year Pear withdrew its previous financial forecasts and announced that it would be exploring a sale or other “strategic alternative” to stanch the hemorrhaging funds.

Just a month later, however, Pear filed for Chapter 11 bankruptcy. Along with making plans to auction off its assets, the company also laid off more than 90% of its remaining employees.

In a LinkedIn post shared the day of the bankruptcy announcement, Pear CEO Corey McCann attributed the difficulties that many digital therapeutics makers are facing to insurers’ reluctance to cover the technology.

“We’ve shown that clinicians will readily prescribe PDTs. 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,” he wrote.

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