Table of Contents
Pear Therapeutics is a company who create digital therapeutics for insomnia and substance abuse. They merged with another company, a special purpose acquisition company (SPAC) last December.
Bringing in $4.2 million revenue in total for the year (much more than the $4 million guidance) Pear also beat prescription numbers as well as covered more lives than forecast.
Despite this impressive increase, Pear saw a 55% decrease between 2020 and 2021, due to a Novartis licensing agreement ending. This took most of the licensing revenue from Pear but it did manage to increase product revenue by 25 times once they started to commercialize the three main therapeutics in their range.
Future Financial Forecast
Pear believes their revenue will increase even more because of more coverage and prescriptions. The company is aiming for $22 million this year, with 100 to 120 million covered patients and 50,000 to 60,000 written prescriptions. Analysts agree there is certainly an uptick in reimbursement and this goal is achievable.
Although creating and launching brand new products is not something without risks, Pear Therapeutics were successful in 2021. Not only did they reach their revenue goal but they also beat their goal of 12,500 prescriptions by getting 14,000, almost 50% of which were fulfilled.
Reasons Behind Pear’s Success
A lot of Pear’s progress has been via creating partnerships with PBMs, insurers and employers to cover their digital therapeutics.
The company claims that around 30 entities either purchase their products in bulk or cover the product as a covered benefit on their formularies.
Pharmacy covers most of the coverage seen so far, perhaps because of simplicity. It is certainly simpler to oversee and then adjudicate a pharmacy claim than it would be for a traditional medical claim.
Of course, not every client has the ability to process these digital therapeutics, since they are regulated as medical devices, via the benefit of the pharmacy.
For this reason, Pear has chosen to enjoy the benefit of a new CMS Healthcare Common Procedure Coding System allowing prescriptions to include digital behavior therapy and reimburse it as a medical benefit. This will not go into effect until April 2022 however, so it isn’t straightforward to say whether this is going to make a large impact or not.
Pear Digital Therapeutics
There are 3 FDA-approved digital therapeutics in the company’s current arsenal:
- Somryst: A program to tackle insomnia
- ReSET: A 12-week course to treat substance abuse
- ReSET-O: A treatment for opioid use disorder
Pear would like to expand their label to include alcohol use disorder. In addition they are working on a digital remedy for depression. The company is working with Softbank currently to develop a treatment for insomnia which is aimed at the Japanese market.
Despite their successes, the company has some unknowns regarding long-term use and reimbursement of their products. The company had a $65.1 million loss in 2021 which was a 33% improvement over 2020. They also flagged concerns about how well they could fund operations in a SEC filing.
Pear has funded operations via proceeds from equity and also debt issuances which include the business combination in order to fund operations. This means the company must figure out a method to raise more equity as well as debt financing for future operations.
Alternatively Pear might be faced with the challenge of scaling back their development programs. They ended 2021 with $170 million in cash which is enough to cover their operations this year and also into 2023. It is fair to say the future is looking bright for Pear Therapeutics.