Akili Interactive is kicking off 2023 with the goal of shrinking its operational footprint and cutting costs to help expand the commercial reach of its digital therapeutics—a trade-off that will cost 46 jobs and a handful of pipeline projects.
The layoffs comprise nearly a third of the company’s workforce. In a letter to employees included in a filing (PDF) with the U.S. Securities and Exchange Commission (SEC) last week, Akili said the laid-off workers would receive “at least two months’ salary, plus additional compensation in recognition of employee contributions.”
According to the filing, those severance costs will total between $1.5 million and $2.5 million, which Akili is expecting to pay out by the end of the first quarter of the year. In the letter to employees, CEO Eddie Martucci offered his thanks and apologized to those laid off.
“I take personal and sole responsibility for how we have grown, and for being in a position where instilling more operational efficiency means a reduction of employees and roles,” he wrote. “I also didn’t anticipate the dramatic shift in the economy. I wish that we had a more efficient footprint so that this action would be less dramatic, but the truth is that we are just not as lean as we can be, and for that I apologize.”
Alongside the layoffs, Akili is narrowing its pipeline. The company already received FDA clearance for EndeavorRx, a prescription video game that’s indicated to improve attention in children 8 to 12 years old who have been diagnosed with attention-deficit/hyperactivity disorder (ADHD).
Akili had previously outlined plans to apply the same technology to treatments not only for a wider range of ADHD patients but also for other conditions including autism, multiple sclerosis, depression and more. The former group of applications is still in play: Akili said in the SEC filing that it would move forward in seeking an extended label from the FDA this year to make EndeavorRx available to teenagers between the ages of 13 and 17, while also cutting short enrollment in its adult ADHD trial to speed up data analysis and “maximize capital efficiency.”
The latter category, however, has been all but eliminated. Akili has no current plans to continue funding any of its non-ADHD research; though clinical study data has already been published from studies of autism, MS and major depressive disorder, Akili is halting all future interactions with the FDA for those projects, and the company is also canceling plans to begin a study of its technology for cognitive monitoring.
Still, the newly public company said it would continue to support investigator-initiated research in indications outside of ADHD, while also considering new partnerships and other routes to continue those research plans without providing direct funding. Additionally, Akili is still expecting to share data from two external trials of its software for COVID-19 “brain fog” sometime in the first half of this year.
Martucci offered additional reasoning for the reorganization in his letter to employees: “To allow Akili to be as independent as possible from the current economic environment, I believe it is imperative for Akili to extend our runway to be able to push towards our vision of making EndeavorRx—and by extension, cognitive treatment—part of mainstream medical care.”
He continued, “That means, we need to reduce our operating ‘footprint’ to a more sustainable level. To achieve this, we are reducing both internal and external spending as we seek to establish a sustainable operating model and put us on a path to profitability. As difficult as this decision is, it is the right thing to do for our business and all Akili shareholders, and, most importantly, we believe it best enables us to deliver on our promise to millions of patients.”
Since going public via a SPAC deal last August, Akili has seen its stock plummet from an opening price of just over $14 to a low of 97 cents in the final days of 2022. Its sales have been similarly underwhelming: After beginning the commercial launch of EndeavorRx in the third quarter of last year, Akili reported $82,000 in revenues from the program for the quarter, versus operating expenses of $24.5 million.