Digital medicine company Akili gets cold market reception after blank-check merger
Akili Interactive shares plunged on Monday and again on Tuesday after the digital therapeutics developer went public via a merger with a special purpose acquisition company. The deal netted Akili more than $163 million, which it plans to use to commercialize its video game-based treatment for pediatric ADHD, the company said Aug. 19.
Akili’s stock opened as high as $36 on Monday, before falling to less than $6 by mid-Tuesday morning. The Boston-based company is now valued at less than $200 million.
Still, Akili expects the new funds, combined with its cash on hand, will provide enough money to cover at least 24 months of operations. Other digital health companies, such as Pear Therapeutics, have trimmed staff as they look to extend their runway amid tougher market conditions.
Akili merged with Social Capital Suvretta Holdings Corp. I, one of several special purpose acquisition companies created by Chamath Palihapitiya, a venture capitalist and former Facebook executive who’s sometimes known as the “SPAC King.” Shareholders of the so-called blank-check company approved the deal in a meeting on Aug. 18.
SPAC mergers offer an alternative way for private companies to make the jump onto public markets, allowing them to bypass a lengthy process of courting investors. But the deals have fallen out of favor recently, even as the market for traditional initial public offerings has cooled substantially.
Traditional IPOs have to date raised about $5 billion so far in 2022, a sharp drop from the typical $30 billion or so in past years and far below the more than $100 billion raised at this point in 2021, according to Dealogic data cited by The Wall Street Journal.
The pain is particularly acute in the biotechnology sector, which produced nearly 200 IPOs in 2020 and 2021. To date, only 15 biotech startups have gone public via IPO this year, data from BioPharma Dive show.
Eddie Martucci, Akili’s founder and CEO, will continue to lead the company, while Palihapitiya will chair its board.
Akili currently has one product, a video game called EndeavorRx that is intended to improve attention function in children with ADHD. The company received clearance from the Food and Drug Administration in 2020, and is planning a full launch in the U.S. in the fourth quarter of this year.
Akili plans to put some of the proceeds of the deal toward marketing efforts, as well as developing other digital therapeutics for autism spectrum disorder, multiple sclerosis and major depressive disorder.
The company’s revenue has declined in recent years as it earns less from licensing deals and has yet to complete the commercial launch of EndeavorRx. In a July 14 regulatory filing, Akili reported $66,000 in revenue for the first quarter of 2022, down 44% from the year-earlier period. For the full year 2021, the company reported $538,000 in revenue, down from $3.94 million in 2020.
The drop led to a deeper net loss of $61 million for Akili last year.
Ned Pagliarulo contributed to this story.
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