Pear Therapeutics Files For Bankruptcy

Pear Therapeutics (Nasdaq: PEAR). a standard-bearer for the fledging prescription digital therapeutics industry, announced today that it had filed for chapter 11 bankruptcy and suspended new prescriptions for its products. Most of the Boson-based company’s workforce of 200 employees were laid off, and the co-founder founder and CEO, Corey McCann, M.D., Ph.D., stepped down.

Pear, which is based on Boston, had announced last month that it was an exploring options that include acquisition or merger and that it was unable to complete a transaction on favorable terms, liquidation was an option.

Corey McCann, M.D., Ph.D.

In a LinkedIn post today, McCann pointed a finger at payers: “We’ve shown that our products can improve clinical outcomes. We’ve shown that our products can save payerrs money. Most importantly, we’ve shown that our products can truly help patients and their clinicians.But that isn’t enough. Payers have the ability to deny payment for therapies that are clinically necessary, effective, and cost saving.”

An SEC filing about the bankruptcy said McCann will continue to serve on the company’s board and provide consulting services at a rate of $225 per hour for up to 30 hours a week.

Pear has three products on the market: reSET for substance use order, reSET-O for opioid use disorder, and Somryst for insomnia. The reSET products use cognitive behavioral therapy to encourage people to stay in outpatient programs and not abuse substances and opioids. Somryst also uses cognitive behavioral therapy but as a way to build good sleep habits and avoid behaviors and thoughts that cause insomnia. “It is like a personal trainer of your sleep muscles” says a promotional video on the company’s website.

The company, which McCann co-founded in 2013, has kept itself in the news with numerous press releases about its products being covered by payers — mainly Medicaid programs— or being adopted for use. In 2021, it got some attention after entering into a value-based agreement with Prime Therapeutics, the Minnesota-based pharmacy benefit manager owned by Blues plans, that tied payment to outcomes such as hospital inpatients and hospital costs. Pear officials have been on panels at the meetings of the Academy of Managed Care Pharmacy (AMCP), which has thrown its weight behind legislation that would lead to Medicare coverage of prescription digital therapeutics.

Related: Digital Therapeutics Shaping the Future of Care

In the announcement of its third quarter financial results in November 2022, Pear said its annual revenue in 2022 would be between $14 million and $16 million and that it would have between 35,000 and 45,000 prescriptions for the year with an average sales price of $1,150 and $1,350. The company said it expected its 2023 revenues to be between $27 million and $37 million.

But there have also been some warning signs. That same announcement in November 2022 included news that Pear had laid off 59 employees, or about 22% of its workforce. Investors had cooled on the company; its stock price has trended downward since late November 2021.

At the AMCP annual meeting in San Antonio in March, members of a panel about coverage of prescription digital therapeutics mentioned that use of Pear’s products had been lower than expected or that coverage hadn’t filtered down yet to the health plan level.

More than 100 people had commented on McCann's LinkedIn post by early this evening, mostly with words of praise and thanks.

"This is sad news, but you've taken the blows on behalf of the entire DTx (digital therapeutics) developer community. Thank you for everything you've achieved in this space so the rest of us can innovate further," wrote Ravi Janapureddy, co-founder and CEO at Resony, a mental health digital therapeutic developed in the United Kingdom.