Prescription digital therapeutics company Akili, Inc. (Nasdaq: AKLI) recently announced a significant Akili workforce reduction digital therapeutics event, terminating nearly half of its remaining employees. This latest layoff, impacting 46% of Akili’s staff, will eliminate the company’s marketing and medical affairs teams, according to publicly available filings. The restructuring is estimated to cost between $2.3 million and $2.8 million, including severance expenses, and is expected to be completed by the end of the second quarter of 2024.
This marks the third major round of layoffs for Akili within the past 18 months, signaling ongoing operational and financial challenges amid a shifting strategic focus.
A Pattern of Akili Workforce Reduction Digital Therapeutics
Akili’s recent announcement follows two earlier rounds of layoffs in 2023, reflecting both the difficult economic environment and a strategic transformation within the company.
- January 2023: The company laid off 46 employees, approximately 30% of its workforce, citing changing market conditions and a new direction in its business model.
- September 2023: Akili cut 40% of its staff, primarily in its field sales force and market access teams, aligning with its shift away from a purely prescription-based model toward a subscription-based model targeting broader user engagement.
This continuing trend of Akili workforce reduction digital therapeutics highlights the challenges the company faces while transitioning from a prescription-focused approach to a user subscription-based model.
Strategic Evaluation and Financial Maneuvers
The latest Akili workforce reduction digital therapeutics announcement coincided with news that Akili’s board will explore various strategic options and alternatives to maximize shareholder value. The company disclosed that there is no guarantee the process will lead to a transaction or that any transaction would be completed on favorable terms. This signals possible considerations ranging from partnerships and mergers to potential asset sales or restructuring measures.
Additionally, Akili amended its collaboration agreement with Shionogi & Co., a global pharmaceutical company headquartered in Japan. The amendment includes Shionogi forgiving a $5 million long-term debt obligation, making an upfront payment of $10.5 million, and possibly providing up to $4.5 million more in future payments. This financial relief supports Akili’s liquidity as it navigates its ongoing transformation.
Akili’s Digital Therapeutic Products
Founded in Boston, Massachusetts, Akili is a pioneer in prescription digital therapeutics. Its flagship product, EndeavorRx, became the first FDA-cleared prescription video game-based treatment for pediatric attention-deficit/hyperactivity disorder (ADHD) in 2020. EndeavorRx is designed as a digital medicine that improves attention function for children aged 8 to 12 through engaging gameplay targeting neurological function.
In addition to EndeavorRx for children, Akili has developed EndeavorOTC, an over-the-counter, gamified therapeutic aimed at adults, which is currently under FDA review.
Despite the ongoing Akili workforce reduction digital therapeutics, the company has committed to continuing product availability and support for existing users.
Industry Challenges and Outlook
The Akili workforce reduction digital therapeutics situation is not unique. Pear Therapeutics, a pioneer in the digital therapeutics industry and the first company to receive FDA de novo clearance for a digital therapeutic, filed for bankruptcy in April 2023. Pear’s financial struggles likely shook investor confidence, as noted in the Pitchbook digital health report, which observed a cooling in investment enthusiasm.
Despite this, the digital therapeutics sector saw a steady volume of transactions in 2023, including mergers like BehaVR’s union with Fern Health, and acquisitions such as Dario Health acquiring Twill earlier this year. Pitchbook analysts anticipate more consolidation in 2024 as companies strive to scale, reduce costs, and boost competitiveness.
Innovation Continues Amid Sector Transformation
Even as companies like Akili face hurdles, innovation persists in digital therapeutics. For example, Princeton-based Curio Digital recently received FDA 510(k) clearance for a prescription digital therapeutic targeting postpartum depression, illustrating continued advances in the field.
Akili’s ongoing Akili workforce reduction digital therapeutics reflects the complexities of bringing digital medicine to market — balancing technological innovation, regulatory compliance, and business sustainability.
Conclusion
The latest Akili workforce reduction digital therapeutics marks a challenging phase for the company as it recalibrates its business strategy and operational structure. These workforce cuts, paired with strategic exploration, illustrate the difficulties digital therapeutics companies face in an evolving and competitive marketplace.
While Akili works to stabilize and grow, the digital therapeutics sector is expected to experience continued consolidation and cautious investor interest. Success for Akili and similar companies will depend on regulatory approvals, market adoption, and the ability to develop sustainable revenue models.
For now, Akili remains committed to supporting its current users and making its products available as it adapts to the future of digital therapeutics.
