A full guide to Pear Therapeutics and its SPAC

Pear Therapeutics is the first company of its type to gain federal approval in the US for apps that treat psychiatric ailments. It has investors intrigued as it plots a SPAC as a route to going public.

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What is Pear Therapeutics?

Pear Therapeutics is a biotechnology and software company. It offers prescription digital therapeutics that that seek to manage or treat psychiatric and neurological diseases.

It is headquartered in Boston, Massachusetts and was founded in 2013 by Corey McCann, Stephen Smith and William Greene. Significantly, it has rolled out multiple products that have received landmark approval from the United States' Food and Drug Administration (FDA).

Launched in 2013, it immediately targeted mental health and in doing so responded to a clear gap in the market, according to McCann, who has an MD and PhD in neurobiology.

How do Pear Therapeutics' apps work?

The flagship product of Pear Therapeutics is reSET, a 90-day prescription app that provides cognitive behavioural therapy for the treatment of substance use disorder and is intended to be used as a complimentary or parallel treatment to regular outpatient consultation. The list price for a 90-day prescription is $1,665. 

In 2017, ReSET was the first mobile app to receive FDA authorization to treat alcohol, cocaine, marijuana and stimulant use disorders. ReSET-O, which is indicated for the treatment of opioid use disorder, received FDA authorization in 2018, followed by Somryst, Pear’s app to treat chronic insomnia in 2020.

Why does reSET cost $1,665 for 90 days?

The $1,665 price tag for a single course of ReSET prescription treatment can be mitigated by setting it alongside the health costs associated with patients who do not use the app, according to McCann

He cites studies that demonstrate the app lowered overall healthcare spending for patients by reducing emergency room visits and hospitalisation to the tune of around $2,150 per patient.

McCann says: "We built the company with this insight that software could be a new category within healthcare. Software can specifically treat diseases in many of the same ways that you currently think about drugs."

What is Pear Therapeutics' IPO plan?

Pear Therapeutics plans to go public in a $1.6 billion special purpose acquisition corporation, or SPAC deal. Pear has already raised more than $250 million to date with Softbank leading the start-up’s Series D funding round.
Doctors have written 20,000 prescriptions of Pear’s apps to date. The company estimates it will hit around $4 million in revenue by the end of the year.

Pear is essentially betting on mainstream acceptance of prescription digital therapeutics - either on their own or in conjunction with pharmaceutical drugs and traditional psychiatric consultation.

To that end, the company's projections that around 150,000 prescriptions will be written in 2023, amounting to around $125 million in revenue and a 3,025% increase in a two-year period, may seem if not fanciful then certainly on the optimistic side. 

How can Pear achieve exponential growth?

That’s where the SPAC deal comes in. Pear is merging with Thimble Point Acquisition Corp, a blank check company associated with Hyatt Hotel billionaire heiress Karen Pritzker.

Following the completion of a reverse merger planned for the second half of 2021, Pear will have access to gross proceeds of around $400 million. Most will be in the form of cash, but $125 million will come in the form of private investment in the stock, much of it from Pear’s existing investors, such as Softbank, Novartis and Jazz Venture Partners.

It can be safely assumed that Pear will use a large percentage of these funds to considerably step up its marketing efforts. Its agreement with the Sandoz division of Novartis to co-market its apps came to an end in 2019 and a re-think is required.

What is Pear's marketing strategy?

Charting the way forward, McCann told Forbes: “It's a space that really requires commercial companies to operate and iterate at the speed that you would probably normally associate with tech. It became fairly clear that this was really a space that needed a bespoke commercialization engine.

“Because of Covid, we have this really interesting, perfect storm within addiction and behavioral health conditions, where there are more triggers and less access for patients. At the heart of our commercial deployments is really in trying to bring access to patients where they are.” 
Rapid commercialisation can also be achieved if agencies - such as insurance companies - are prepared to open up their own budgets to provide the app free of charge to their members.

Pear has contracts with 15 payors - typically Medicaid organisations - each with one million members or more. This gives Pear strong market depth in Kentucky, Indiana and Ohio.

Who is on Pear Therapeutics' executive team?

  • Corey McCann, President & CEO
  • Chris Guiffre, CFO & COO
  • Erin Brenner, Chief Product Development Officer
  • Kathy Jeffery, Chief People Officer
  • Yuri Maricich, Chief Medical Officer & Head of Development
  • Ronan O'Brien, General Counsel & Secretary
  • Julia Strandberg, Chief Commerical Officer

What else does Pear have in its pipeline?

Pear is developing a range of new products. It is actively acquiring existing assets from third-party providers which it then refines before distribution. It also has its own staff creating other new products from scratch.

For example, Pear bought apps for post-traumatic stress disorder from USC, acute and chronic pain from Firsthand Technology, and irritable bowel syndrome from the Karolinska Institute in Sweden.

Meanwhile, it is developing its own apps for schizophrenia, depression and epilepsy, among other diseases.

The SPAC deal “allows us to have the fully-funded plan to really make Pear the leader in this space,” McCann says. “The deepest and broadest pipeline, but also all of those assets rolling up to the same platform and to really become the de facto platform for the space.”

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