For the second time this year, Pear Therapeutics is laying off employees to cut costs and extend its cash runway through 2023.
The latest round of cuts was announced this week alongside the digital therapeutics maker’s third-quarter earnings report. It’ll eliminate around 59 jobs, which Pear said represents about 22% of its workforce as of the end of September.
“I want to take this opportunity to publicly express my gratitude for the countless contributions of our departing Pearmates,” CEO Corey McCann said during a call with investors Monday. “I want to wish each and every one of them great success in their future endeavors. These are hardworking, mission-driven and talented individuals who have been valued members of our team.”
Later on in the call, McCann admitted, “The mood around here today is not great. People here are excited about this mission. They are very passionate about what they do, and one of the things I love about this place is that our employees care about each other very much. So for people to learn that some of their teammates will be leaving the company was hard for everyone today, and it is especially hard for the people who are leaving.”
That said, the CEO continued, “this company is singularly focused on bringing a new class of medicine to the world. And most of us, if not all of us, are extremely proud of the historic accomplishments we’ve already made to do that and are very excited about the progress that lies ahead of us. With that in mind, I believe that most people understand that it would’ve been irresponsible to this business and to our mission not to take decisive steps to react to the current environment.”
The “difficult cuts” are expected to save Pear about $10.7 million in 2023, helping bring its full-year operating costs below the $100 million mark, Chris Guiffre, the company’s chief financial and operating officer, said on Monday’s call. In comparison, its total cost and operating expenses clocked in at nearly $110 million in 2021 and have already reached about $104.3 million for the first nine months of 2022.
“We expect to incur approximately $2.6 million in cash expenses related to employee severance, benefits and related costs, and a stock-based compensation charge of between $300,000 and $900,000 related to employees impacted by the reduction in force,” Guiffre added.
The exec said the cuts are taking place all across the business, with “almost all departments of the company” impacted by the layoffs.
The previous restructuring efforts came in late July, when Pear said in a filing with the U.S. Securities and Exchange Commission (SEC) that it would eliminate about 25 jobs and “narrow its near-term business focus.” Those moves were expected to trim about $28 million off Pear’s operating expenses throughout the following 18 months, though the company also incurred a $900,000 charge in the process to provide one-time severance payments and a short period of continued benefits for the affected employees.
That narrowed focus—which included reducing costs in “pipeline candidates, discovery programs, business development and the company’s dual platform in order to prioritize certain of its commercial efforts,” per the SEC filing—is continuing with the new cuts, too.
“While we restructured our business in July to focus more on near-term commercial opportunities and temporarily pause our pipeline and platform efforts, this reduction does not change that in any way,” Guiffre said on the investor call.
“It allows us to try to focus on those short-term commercial opportunities,” he continued, primarily by selling Pear’s reSET and reSET-O digital therapeutics for substance use disorder and opioid use disorder, respectively, to states across the U.S., “and trying to do that with a lower cost base.”