Prescription digital treatment developer Pear Therapeutics plans to go public this year through a merger with special purpose acquisition company Thimble Point Acquisition Corp., the companies announced Tuesday.
The deal values Pear, founded in 2013 and one of the first companies to earn clearance from the Food and Drug Administration for a digital therapeutic product, at $1.6 billion.
Pear joins a growing number of healthcare companies going public through SPAC mergers. A SPAC, also known as a blank check company, raises money through an IPO that it then spends acquiring other companies and taking them public. For the startup that's being acquired, that can cut down on the risk, cost and time involved with going through the initial public offering process.
Ten digital health companies announced or completed SPAC mergers in 2021's first quarter, according to data from Rock Health, an early-stage digital health venture fund that also compiles research on the sector. SPACs across all industries in the U.S. raised more capital in 2021's first quarter than in all of 2020, according to Rock Health's report.
After the merger with Thimble Point, Pear plans to list itself on the Nasdaq under the ticker "PEAR."
Pear, which will be renamed Pear Holdings Corp., will continue to be led by the company's existing management team. Pear's current equity holders will own 72% of shares of common stock in the combined company. Thimble Point shareholders and private investment in public equity—or PIPE—investors will hold the remaining shares.
The transaction will include up to $276 million from Thimble Point and $125 million from PIPE investors.
PIPE investors include Novartis-Qualcomm joint venture dRx Capital, big data analytics company Palantir Technologies and an unnamed integrated delivery network.
Pear will use proceeds from the deal, pegged at roughly $400 million, to continue to commercialize its three FDA-cleared digital therapeutics, develop its pipeline of new products and build a platform that will let the company distribute other third-party prescription digital therapeutics, according to the company.
"We believe this transaction will allow us to drive widespread usage of (prescription digital therapeutics) to treat major medical conditions and overcome significant barriers to patient care," said Dr. Corey McCann, Pear's president and chief executive officer, in a statement.
Digital therapeutics like Pear are a popular area of interest among investors.
Mobile health apps raised a collective $912 million in funding during 2021's first quarter, making it the second most-funded digital health sector for the quarter, according to data from market research firm Mercom Capital Group. Mobile health app companies came in second to telehealth companies, which raised a collective $2 billion from investors.
Pear received its first FDA clearance in 2017 for reSET, a mobile app that clinicians can prescribe as part of outpatient treatment for alcohol, cocaine and stimulant substance use disorders. The app delivers interactive cognitive behavioral therapy and provides a way for patients to report information, such as tracking cravings and triggers, to clinicians.
Pear has since gained FDA clearance for two more digital therapeutics—for opioid use disorder and chronic insomnia—both of which require a prescription from a clinician.
Pear and Thimble Point expect to complete the merger in the second half of the year.
