Akili abandons prescription model, cuts jobs

Akili will slash its workforce and stop offering products that require prescriptions, the digital therapeutics vendor announced Wednesday.

The company is eliminating 45 jobs, which amounts to 40% of its headcount. Most of those positions are linked to prescription-based offerings, Akili said in a news release. The company laid off 46 employees in January.

Related: Digital therapeutics industry looks to move past Pear's bankruptcy

Akili is moving away from prescription products to reduce its reliance on health insurance coverage, improve patient access and boost profit margins, the company said in the news release.

Instead, Akili is converting to a subscription model for products such as EndeavorRx, a video game therapy for children with attention deficit hyperactivity disorder. The company is seeking Food and Drug Administration approval to convert that tool to nonprescription status after launching EndeavorOTC as a a direct-to-consumer product for adults in June. According to the company, EndeavorOTC had more than 4,000 active subscribers and has generated $341,000 in revenue, or $81.88 per user, as of Sept. 5.

Health insurance companies have been slow to cover digital therapies that require prescriptions due to concerns about liability, insufficient clinical evidence and slow FDA reviews.

Akili’s strategic shift comes at an inflection point for the digital therapeutics industry. Pear Therapeutics declared bankruptcy in April and sold off its assets in May. Former Pear CEO Corey McCann said lack of insurer coverage was a major reason the company went out of business.

Digital therapeutics advocates aim to avoid a repeat of Pear's failure by focusing on reimbursement, including lobbying for the Prescription for Digital Therapeutics Act of 2023, which Sen. Jeanne Shaheen (D-N.H.) and Rep. Kevin Hern (R-Okla.) introduced in March. Congress has taken no action on the bill.

The FDA authorized EndeavorRx in 2020, but Akili has struggled to attract insurance coverage or generate significant revenue from the product. The company reported an $11.9 million net loss, or 15 cents per share, on $114,000 in revenue in the second quarter.

Akili shares closed at 91 cents on the Nasdaq Wednesday, up 3.2% from Tuesday. The company went public and opened at $36.06 last August but ended its first day of trading at $7.15.