Seen Better days: Digital therapeutics maker lays off 35% of workforce as losses mount

In an all-too-familiar echo of fellow digital therapeutics maker Pear Therapeutics’ recent desperate attempts to cut costs, Better Therapeutics has begun making its own money-saving moves.

Better is laying off approximately 35% of its employees, according to a filing (PDF) with the U.S. Securities and Exchange Commission on Friday. The company counted a total of 44 employees as of the end of 2021, per its most recent annual report (PDF), meaning around 15 workers could lose their jobs.

The layoffs were implemented “as part of a cost reduction initiative to improve [Better’s] cash runway and focus on the long-term success of the company,” according to the SEC filing. Employees were informed of the layoffs on Thursday, and cuts would be completed by Friday.

In total, Better said it was expecting severance costs and benefits payments to add about $400,000 in expenses to its second-quarter earnings report.

In a letter sent to employees on Thursday—which was excerpted in the SEC filing—CEO Frank Karbe called the layoffs “devastating” and thanked the affected workers for their “dedication and passion.”

“As CEO, I take responsibility,” he wrote. “While this does not ease the pain, I recognize today was an extremely difficult day. We built this company on the foundations of transparency and trust, so it is important I share the background for these decisions. Above all, I am sorry it has come to this.”

That background, Karbe went on to explain, includes the facts that Better is still awaiting its FDA clearance for its first prescription digital therapeutic—which is designed to help people with Type 2 diabetes reduce their blood sugar. The FDA accepted the application last December. The company is in the process of shifting focus from R&D to its commercial teams ahead of that expected clearance.

“My long-term outlook for the potential of our digital therapeutics platform, not just in Type 2 diabetes but potentially many other cardiometabolic diseases, remains unchanged,” Karbe wrote, before concluding, “To all our team members, while this is a setback in the journey that began eight years ago, our story is far from written. I am confident we will get through this.”

After spending most of the last decade developing its digital therapeutic technology without any products on the market—and with no guarantee that skeptical government payers will reimburse the use of its apps even if the FDA clears them—Better has racked up significant losses.

For the first nine months of 2022, the company's net loss was nearly $31 million, Better reported in its most recent financial filing (PDF). That loss is about 17% higher than its net loss at the same time the year prior. Meanwhile, its accumulated deficit had surpassed $102.7 million by the end of the third quarter, nearly double its deficit at that point in 2021.

Alongside those losses, Better reported that its assets had dwindled to just over $28 million, well below the almost $51 million it tallied at the end of 2021.

In the report, the company said it was expecting to continue incurring “substantial expenses in the foreseeable future” as it plows ahead in developing a planned range of digital therapeutics and begins commercializing any that receive regulatory clearance. Though Better said it couldn’t provide an exact estimate of those future losses, it admitted that the company “will require substantial additional funding in the future” to continue operations and that if it’s unable to secure that funding, its business may be “adversely affected.”

As of that November 2022 filing, Better said it only had enough funds on hand to keep its operations up and running through the first quarter of this year, adding, “These factors raise substantial doubt regarding the company’s ability to continue as a going concern.”