Akili Interactive, a maker of video-game-based treatments for young people with ADHD and other behavioral indications, made its public debut to a turbulent stock market last week. The company's shares, which opened at $36, fell below $4 Monday in early trading.
Akili merged with a special purpose acquisition company created by former Facebook executive Chamath Palihapitiya. Combined with Akili’s cash on hand, funds from the deal will give the Akili two years of runway, not including revenue, according to the company.
Akili CEO Eddie Martucci said the company’s early focus isn’t so much on its stock price, but on raising funds to commercialize its first product, a game called EndeavorRx that is cleared by the Food and Drug Administration to improve attention in kids with attention deficit/hyperactivity disorder. It’s downloaded as an app for a smartphone or tablet, and involves navigating a spaceship through different levels while collecting targets and avoiding obstacles.
EndeavorRX is part of a broader class of products called digital therapeutics, or software-based treatments that are sometimes prescribed by a physician.
Despite advances in technology and clinical validation, the sector hasn’t had “as rapid or clear of a glide path in terms of the go-to-market,” said Megan Zweig, COO of Rock Health, which advises and invests in digital health companies. “There’s still a lot of outstanding questions around how these solutions are going to be paid for, how they’re ultimately going to get in the hands of consumers, and be prescribed by physicians… and also how they’re going to get the real world evidence that I think they will ultimately need to secure reimbursement.”
Figuring out the reimbursement piece is a key next step for Akili and its peers as they look to market their first prescription therapeutics.
Martucci and Matt Franklin, Akili's new COO, talked about how the company is preparing a full-scale launch of EndeavorRx later this year while navigating a challenging market.
This interview has been edited for length and clarity.
MEDTECH DIVE: It’s a challenging market — why go public now?
EDDIE MARTUCCI: We’ve said all along that we want to get the business to a proving point, meaning we have a product that can be prescribed by a doctor, has been cleared by the FDA, has gone through all the clinical evaluation, and that we've built enough of the initial infrastructure that we believe we can scale. We've done that.
What's also happened though, is the last two years of COVID has dramatically increased the need. The need was already massive — that's why we started the company. But it's gotten much worse, especially in our markets. We're talking about children, teens with cognitive issues, the lack of services, the pullback of services in this market has been massive. And frankly, there's been exploitation of some of the existing therapeutic options like drugs. You've seen telehealth [companies] come under fire for this. So I think patients are in more need [of our product] than ever before.
And it's the right time in our company that we want to scale. So that's why this was the moment for us to be a public company. The market environment is really neither here nor there, frankly. It's really about accessing capital and having the flexibility to grow a pretty bold vision.
How did you decide on a merger with a SPAC versus a traditional IPO?
MARTUCCI: Last year, we looked at the various ways one could become public. We really liked the SPAC for two easy reasons. First: the amount of capital is generally larger than you can take in at an IPO and that bore itself out here. Even in a tough market, to be able to have over $160 million come in through the deal is large, so it funds our vision for a few years.
And the cool thing about a SPAC is if you choose the right partners … you get real expertise and partnership. Suvretta Capital is awesome at early stage commercial companies in therapeutic modalities, and Chamath Palihapitiya and the Social Capital team really specialize in big disruptive businesses across entrenched industries.
Your share price popped on debut but then fell. What happened?
MARTUCCI: We're in a very volatile market; the whole stock market was a bit crazy [that day]. And [it was] our very first day of trading. And I do think the Akili story has always garnered interest and intrigue. So you know, it's volatility, it's the first day.
We're looking to grow our long-term vision over the [next] couple of years, so it's the capital that's important to us.
The economic slowdown has other digital health companies trimming staff or changing their strategy. How has it affected your plans?
MARTUCCI: It's made us take a sharp look at what we're spending and our plans going forward. We obviously want to be as prudent as possible, but we're really fortunate.
We've been growing modestly since our FDA clearance, and since we've been in this pre-launch phase, we're at just about 125 employees. We never did that massive employee growth, which I'm really glad for. This capital allows us to fund the business for two-plus years, and actually being able to grow during that time frame.
Going forward, will we be even more prudent? Probably, because the market requires that, but we're in a great spot, actually, to grow from here.
You recently said that Akili is planning on a full market launch of EndeavorRx in the fourth quarter. How are you preparing for that?
FRANKLIN: One of the primary uses of this inflow of new capital was to really fuel the commercial launch. What we're trying to accomplish over time is to make sure that any parent or caregiver that wants access to EndeavorRx … can get it quickly and easily and has a really remarkable experience. We've been focused, in this last year, building out the infrastructure to enable that vision.
This is an app … so it can be downloaded from the App Store, Google Play, but it’s a prescription medicine, and so we needed to develop a way to be able to deliver these prescriptions to the caregivers. So with partners, we've created an infrastructure that can enable prescriptions to be confirmed, can collect information like insurance information, and then can deliver that validation code so they can start the therapy. We’ve now seen a few thousand prescriptions flow through that — we have prescriptions in all 50 states.
And now we can really focus on the next phase, which is starting to build a field presence. So, hire a field sales force that can engage and educate healthcare providers where they practice to really help embed this into routine clinical practice.
The app can be used as a standalone treatment or in conjunction with medication. Has it been challenging to change doctors’ prescribing practices?
FRANKLIN: To be honest, there's not a tremendous amount of pushback. I think there's curiosity. There's a little bit of upfront education about this new category [of digital therapeutics].
Intuitively, they get it very quickly. They feel comforted by the clinical data. The questions then flow into, “how do I order this and how often does the child need to do the therapy?” That’s where that infrastructure that we talked about will be important.
Who pays for it?
FRANKLIN: We have a team on board today that's already engaged with educating the private insurance plans [and] some of the state Medicaid organizations, and we're focusing on the clinical data.
MARTUCCI: I do think at this point, there's been frankly a little bit of hesitation in digital therapeutics as a class. So for the last couple of years I've had a lot of tolerance and understanding that insurance companies of course need to be made aware, they need to be educated. This is a new modality. But I do think we're at the point where they know the modality, where we and others have done the work to educate them.
So we're committed to keeping this available, but I also think that it is time that you're going to see insurers start to step up, because they have to at this point. Being knowledgeable about this option, and not giving it access broadly to patients is not the right thing for patients.
How much does it cost?
FRANKLIN: It’s $450 for a 30-day prescription. We do offer patient financial assistance and discounts for those that have to pay out of pocket.
What other indications are you pursuing?
FRANKLIN: Our near-term focus is to continue to drive awareness and adoption in that core pediatric ADHD population, so [ages] eight to 12, which is a fairly sizable number of potential patients, almost 2 million.
From there, it's expanding to adolescent and adult ADHD. Beyond that, we're looking at other indications like multiple sclerosis, major depressive disorder, acute indications like COVID brain fog, as well as autism spectrum disorder, which is near and dear to my heart.