That shift includes a workforce reduction of approximately 40%. It includes the elimination of the company’s field sales force and market access team. That accounts for approximately two-thirds of the reduction. Akili plans to invest a portion of the savings in activities to drive consumer awareness and capital-efficient expansion of its business.
This move follows a January workforce reduction of 30% — totaling 46 workers. The company is one of many to slash headcounts as layoffs took medtech by storm recently. Assuming no major headcount changes since January, another 40% cut for Akili’s remaining staff would total around another 43 employees.
The Boston-based digital medicine developer aims to pursue regulatory approval for over-the-counter (OTC) labeling of its products.
“Today, we are evolving our business to remove barriers for patients trying to access safe and effective non-drug treatment options,” said Eddie Martucci, CEO and co-founder of Akili. “We have the unique ability to offer consumers the same clinically-proven technology as the world’s only FDA-approved prescription video game treatment, with the ease of access and convenience of a consumer tech product. A non-prescription model removes reliance on intermediaries, which we believe will give us more control over our growth and enable us to build a lasting, sustainable business.”
More about Akili and the move toward an OTC model
Akili develops the EndeavorRx video game for children with attention deficit hyperactivity disorder (ADHD). The prescription treatment is delivered through a video game experience as a way to improve attention function as measured by computer-based testing.
Focusing on a consumer-led subscription model could reduce reliance on payers, the company believes. This may enable Akili to grow its business in line with the increasing demand for non-drug cognitive treatments.
Akili launched EndeaverOTC in the Apple App Store in June of this year. The company believes the non-prescription model offers consumers access to differentiated and clinically validated technology. All the while, it removes the reliance on payers that stand in the way of patients trying to access treatment.
“We have seen the non-prescription model play out with EndeavorOTC, which we released in June as a treatment for adults with ADHD,” Martucci added. “In its first three months on the market, consumer demand, engagement, and retention all surpassed our expectations. We believe that our shift to a consumer-led model across our business will maximize our reach in the ADHD patient community and allow us to potentially expand into other large markets, without many of the high cost centers of a prescription model.”
Business change includes financial guidance from Akili
Akili now expects non-GAAP total operating expenses in 2023 to range between $55 million and $60 million. That excludes stock-based compensation expenses. That impairment loss on certain assets is associated with the company’s sublease and severance, plus termination-related costs.
Akili projects 2024 non-GAAP total operating expenses to range between $42 million and $47 million. Again, that excludes stock-based compensation expenses. The company expects sufficient cash, equivalents and short-term investments to fund current and planned operations through the second half of 2025.
By late 2025, Akili expects its non-prescription business model to operate at 60%-70% gross margins.
The company plans to pursue regulatory approval for OTC labeling of its treatment products. It remains on track to submit adult clinical trials data to the FDA for OTC authorization of EndeavorOTC. The company also plans to submit data to convert its pediatric prescription product, EndeavorRx, to OTC in 2024. It expects both products to remain on the market as it pursues these changes.
Akili intends to restructure its organization around the new business model to reflect expected lower operating costs.
