Pear Therapeutics, a pioneer in the concept of prescription smartphone apps, has not yielded the expected results. The company has recently filed for Chapter 11 bankruptcy and disclosed plans to lay off over 90% of its workforce while it searches for a potential buyer.

As per media reports, the company was recognised as one of the Fierce Medtech Fierce 15 winners in 2018 and had successfully developed three prescription digital therapeutics that received FDA approval. This included a groundbreaking achievement with the agency's first-ever de novo clearance for Pear's reSET program, designed to assist individuals undergoing treatment for substance abuse disorders.

Pear Therapeutics had plans to expand its offerings to include cognitive behavioural therapy apps for opioid use disorder and insomnia. Additionally, the company had formed partnerships with pharmaceutical companies like Novartis and Sandoz to explore the use of digital apps as a complementary approach to their own products. The company also aimed to validate its efforts through clinical trials using similar endpoints as those used by major pharmaceutical companies.

Prior to its recent initial public offering (IPO) through a $1.6 billion special purpose acquisition company (SPAC) deal in late 2021, Pear Therapeutics had secured significant private funding in the form of tens of millions of dollars from notable investors, including SoftBank Vision Fund and others.

Despite the company’s achievements, including its founder and CEO Corey McCann's efforts, the company faced challenges in obtaining insurance reimbursements for its products, which impacted its revenue generation. McCann acknowledged that there was still considerable progress to be made in this area.

In a LinkedIn post, Corey McCann, the CEO of Pear Therapeutics, emphasised that the company had successfully demonstrated the willingness of clinicians to prescribe prescription digital therapeutics (PDTs). He also highlighted that patients actively engaged with their products and that their products had shown improvements in clinical outcomes, cost savings for payors, and most importantly, positive impacts on patients and their healthcare providers.

“But that isn’t enough. 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,” he wrote. 

According to Fierce Biotech, the company had encountered scepticism from the Institute for Clinical and Economic Review (ICER), a watchdog organisation focused on drug pricing, which stated in 2020 that it had not found compelling evidence to support the long-term effectiveness of smartphone apps, including Pear's reSET-O, for opioid use disorder and other similar conditions. This reflected a challenge in demonstrating extended benefits over multiple years for such digital therapeutics.

During the COVID-19 pandemic, Pear sought to make its prescription app for chronic insomnia more accessible to patients through a direct-to-patient approach. Utilising its PearConnect telehealth model, the company aimed to connect with the estimated 30 million individuals in the US who suffer from insomnia, virtually connecting them with prescribing physicians and case workers. Additionally, Pear's Somryst app received recognition by winning the Prix Galien USA award for the best digital health product.

In a recent filing with the US Securities and Exchange Commission (SEC), Pear Therapeutics revealed its decision to lay off approximately 170 full-time employees, including CEO Corey McCann. However, a transition team of around 15 individuals will remain to guide the company through the Chapter 11 bankruptcy process and oversee the auction of its remaining assets.

Pear Therapeutics' financial outlook took a downturn recently as the company announced its exploration of "strategic alternatives" for its future, which included options such as licensing agreements, outright sale of its technology, potential mergers and acquisitions, and additional fundraising efforts. 

To cut costs, the company had previously implemented two rounds of layoffs in the latter half of 2022, resulting in the reduction of about 85 employees, despite securing coverage from some US insurers.

At the beginning of the year, Pear had more optimistic projections, including a goal to quintuple its net revenue to approximately $22 million, which appeared to be on the track during the first quarter. However, the company later revised its financial forecasts. CEO Corey McCann expressed gratitude to the employees for their contributions to Pear and its mission to advance digital medicine, despite the unexpected outcome.