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Digital therapeutics firm Akili to cut 50% of workforce, weigh options

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Illustration: Maura Losch/Axios

Digital therapeutics company Akili (Nasdaq: AKLI) said it plans to lay off half of its workforce and will explore strategic options as the troubled firm continues to suffer setbacks.

Why it matters: Akili's struggles show that the first act of digital therapeutics has flopped in a weak reimbursement environment.

Zoom in: Akili says its board and external advisors will weigh a "range of potential strategic alternatives," with no assurance of a transaction.

  • Akili said it will lay off 46% of staff and reworking its distribution partnership with Japanese pharma Shionogi.
  • Shionogi will forgive a $5 million long-term debt obligation and pay Akili $10.5 million in consideration for the elimination of future royalty payments for SDT-001, the Japanese version of Akili's EndeavorRx treatment.

What's next: Akili releases Q1 earnings on May 14 (with no conference call).

How it works: Akili's EndeavorRx is both the first and only FDA-cleared prescription video game — and the first FDA-approved commercial product targeting cognitive treatments for inattentiveness or ADHD.

Catch up quick: In late 2022, Akili went public after merging with Chamath Palihapitiya's Social Capital Suvretta Holdings Corp. SPAC.

  • Last year, the company slashed 40% of its workforce and announced a pivot from a prescription model to OTC, amid persistent difficulty securing reliable reimbursement.

The big picture: Insurers have been reluctant to embrace digital therapeutics, amid lack of long-term data on effectiveness and concerns the technologies could massively increase costs instead of reduce them.

Yes, but: Recent reimbursement discussions and regulatory approvals could make for a better second act.

💬 Our thought bubble: Akili and its ilk may have simply been too early to the party, given Medicare only recently started formal discussions on how to pay for digital therapies.

What we're watching: This month, Click Therapeutics — which picked up assets from Pear Therapeutics' bankruptcy last May — secured FDA approval for its depression digital therapeutic Rejoyn, developed in partnership with Otsuka Pharmaceuticals.

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