It’s been a tough year for makers of prescription digital therapeutics, many of whom have had to drastically cut staff—or even, in the case of Pear Therapeutics, completely shut down—to conserve resources amid lagging payer support for their app-based health programs.
Akili is no stranger to these setbacks, having kicked off the year with a round of cuts that eliminated 46 jobs and several pipeline projects to reduce costs. Now, in its latest attempt to weather the storm, the company is taking a different tack, one that will help it avoid having to rely on skeptical insurers altogether.
Akili announced Wednesday that it plans to shift to a nonprescription model for its digital therapeutics, which focus on providing treatments for children and adults with attention-deficit/hyperactivity disorder, or ADHD. That shift is expected to reduce Akili’s operating expenses, improve its margins and make its digital apps more accessible to people who need them.
Some of those savings will come from the reduced head count needed for the more straightforward commercialization path. In all, Akili plans to trim its staff by about 40%, the majority of which will come from the elimination of its field sales force and market access team, according to the announcement.
Akili’s Endeavor software guides users through the many levels of an interactive video game. It’s designed to stimulate the senses and challenge motor skills, and its built-in algorithms continually adjust the game to suit users’ needs as they play.
A prescription-only version of the game, EndeavorRx, was cleared by the FDA in 2020 to help improve attention in children who have ADHD and are between the ages of 8 and 12.
Then, in June of this year, Akili unveiled EndeavorOTC, an over-the-counter edition of the software aimed at adults with ADHD. Anyone aged 18 and older can download the program from the Apple App Store onto their iPhone or iPad without a doctor’s note; the app is free to download, and monthly subscriptions to the software start around $10.
With its planned shift to a completely nonprescription model, Akili said in the release that it will submit data to the FDA next year to convert the pediatric version of its software from prescription to OTC labeling. It also plans to submit data to the agency later this year to support formal OTC authorization of the adult-focused software—since it was originally allowed to be added to the App Store earlier this year without full regulatory review, thanks to a policy meant to make it easier for low-risk digital mental health tools to reach the market amid the COVID-19 public health emergency.
Both EndeavorRx and EndeavorOTC will remain on the market as is while Akili pursues the formal FDA authorizations.
“We have the unique ability to offer consumers the same clinically proven technology as the world’s only FDA-approved prescription video game treatment, with the ease of access and convenience of a consumer tech product. A non-prescription model removes reliance on intermediaries, which we believe will give us more control over our growth and enable us to build a lasting, sustainable business,” CEO Eddie Martucci, Ph.D., said in the announcement.
With the reduced costs of a fully OTC model, Akili is expecting to see its total annual operating expenses drop about 20% between this year and next: from somewhere between $55 million and $60 million in 2023 to between $42 million and $47 million in 2024.
The company said the shift also extends its cash runway at least into the second half of 2025, at which time it’s expecting to see its business model operating at a gross margin of at least 60%.
“We have seen the non-prescription model play out with EndeavorOTC,” Martucci said. “In its first three months on the market, consumer demand, engagement and retention all surpassed our expectations.”
According to the release, during that period—between June 6 and Sep. 5 of this year—EndeavorOTC attracted more than 4,100 active subscribers. With an average revenue of nearly $82 per user, the digital therapeutic generated around $341,000 in its first three months.