Pear Therapeutics (Nasdaq:PEAR) announced today that it filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
Boston-based Pear and its wholly-owned U.S. subsidiary each voluntarily filed in the U.S. Bankruptcy Court for the District of Delaware. They intend to pursue a sale of the business or assets under section 363 of the Bankruptcy Code.
Last month, the digital therapeutic developer announced that it engaged in a process to explore strategic alternatives to maximize shareholder value. The company said its effort could include seeking out a range of options, including an acquisition or company sale. Other options included a merger, divestiture of assets, licensing or other strategic transactions. Pear also considered seeking additional financing.
Next steps
Pear said that, with protections afforded by its Chapter 11 filing, it intends to continue marketing efforts to potential purchasers. These purchases may retain interest in specific assets or the company could pursue a sale of the whole business. Any sales remain subject to review and approval by the Bankruptcy Court. They must comply with the court’s bidding procedures, too.
The company said it intends to continue scaled-down operations during Chapter 11 as it looks to execute an expedited sale process. It reached a settlement prior to filing with its lender, so Pear plans to use available cash to fund post-petition operations and costs. It aims to continue the ordinary course of its business.
Pear plans to file various “first-day” motions with the court requesting customary relief. This enables the company to transition to Chapter 11 without material disruption to ordinary operations.
Foley Hoag LLP represents Pear as counsel, with Gibbons P.C. as co-counsel, Sonoran Capital Advisors as restructuring advisor, and MTS Health Partners, L.P. as restructuring investment banker.
CEO speaks out
Pear Therapeutics CEO Corey McCann took to LinkedIn to comment on the company’s bankruptcy filing.
“Today is a difficult day for Pear Therapeutics,” McCann wrote. “We announced that Pear voluntarily filed for Chapter 11 and will seek to sell assets through a sales process. We also announced a reduction in force, including me. This is certainly not the outcome I envisioned when I founded Pear in 2013.”
According to the state of Massachusetts, the reduction totaled 78 employees.
McCann thanked Pear’s employees, noting that the team accomplished a lot “in bringing the first prescription digital therapeutics (PDTs) to market.”
“I want to personally thank each and every one of our employees for all that they’ve done for Pear and for patients, McCann said. “You are brave, talented, hard-working, mission-driven people and one of my greatest privileges has been to work by your side. I hope that this news doesn’t lessen your enthusiasm to innovate for patients.
“Here’s to the future of digital medicine that we’ve worked so hard to create.”
Pear Therapeutics’ struggles
Pear Therapeutics develops prescription digital therapeutics. Treatment areas include substance use disorder, opioid use disorder, chronic insomnia and more.
It was a rough year or two for Pear, which went public through a SPAC merger in December 2021. In July 2022, the company laid off roughly 25 workers (9% of its workforce). It attributed this decision to an overall operations restructuring. The company sought to “narrow its near-term business focus and reduce its workforce due to the macroeconomic environment.”
In November 2022, Pear cut another 22% of its workforce. These aimed to reduce its 2023 operating expenses, extend its cash runway and reduce its reliance on financing. The reduction affected approximately 59 employees, representing 22% of its workforce. At the time, the company said it anticipated annual cost savings of approximately $10.7 million in 2023 as a result of the cuts.
