The chief executive of the next Boston company going public believes that within a few years, people will expect to be prescribed software by their doctor and use apps like a pharmacy.
Pear Therapeutics said Tuesday that it will become a publicly traded company through a merger with a special purpose acquisition company, or SPAC. The deal values the combined company at about $1.6 billion. The SPAC, Thimble Point Acquisition Corp., is run by Elon Boms and Steven “Woody” Benson and is affiliated with the Pritzker Vlock Family Office.
Founded in 2013 in Boston and San Francisco, Pear has emerged as a leader in prescription digital therapeutics, a new class of software-based treatments. Like traditional therapeutics, they are tested in randomized clinical trials to demonstrate safety and effectiveness, cleared by drug regulators, and used under the supervision of a prescribing clinician.
Pear has three products on the market: reSET, for the treatment of substance abuse disorder; reSET-O, for the treatment of opioid use disorder; and Somryst, for the treatment of chronic insomnia. Approval from the Food and Drug Administration sets the company apart from a health or wellness app that a developer could make.
Its treatment for chronic insomnia, for example, aims to improve symptoms through a nine-week program based on cognitive behavioral therapy. Patients download the app-based treatment on a smartphone or tablet and are asked to complete a daily sleep diary, among other interventions.
Pear, which has raised $234 million in venture capital funding, has more than a dozen other digital treatments in its pipeline for conditions ranging from schizophrenia to migraines.
With the financing, President and CEO Corey McCann said Pear plans to build out a suite of products for mental health and behavioral disorders and add programs for depression, alcoholism, and anxiety. He said Pear could potentially deploy software that would tackle issues related to cardiovascular diseases or oncology.
“The long-term vision is to continue to be the platform of choice, both for Pear as well as for other companies,” he said. “We think there is an opportunity to be the player that develops the assets, as well as the player that develops the platform.”
McCann said Pear makes money by charging insurers for prescriptions. It currently works with 15 payers, ranging from Medicaid to public and private insurers. Building connections with insurers, as well as with clinicians, gives Pear an advantage in the field, McCann said.
“We hear from many customers that they are looking to integrate with one, and only one, [prescription digital therapeutics] platform,” he said. “When you talk to large provider networks, they are very interested in doing this once. ... It is [Pear’s] aspiration to really be the one-stop shop.”
After the transaction closes, Pear expects to have $450 million in cash on its balance sheet, including proceeds from an oversubscribed and upsized $125 million private investment round backed by health care and technology investors that included 5AM Ventures, Neuberger Berman funds, Palantir, SoftBank Vision Fund 2, and others. The merger is expected to close during the second half of the year.
SPAC mergers have become a popular way for firms to go public as an alternative to traditional IPOs. Several local companies have recently pursued that route. Valo Health, a Boston biotech that uses data analysis and artificial intelligence in drug discovery, earlier this month announced a merger to create a combined firm valued at $2.8 billion. Boston’s Ginkgo Bioworks, which programs cells to produce new proteins, scents, and other products, announced a $17.5 billion SPAC merger in May. And a month earlier, Cambridge-based Tango Therapeutics, a precision cancer medicine biotech, said it would go public in a $353 million SPAC deal.
Thimble Point’s Boms said it talked to more than 100 potential SPAC targets and had serious discussions with about 35, but he was drawn to Pear because of the company’s intersection between health care and technology, and its potential to dominate the emerging market.
“We think over the next five, 10 years, Pear will become a household name,” he said in an interview. “This is a very large opportunity, and really only the beginning of what will be a substantial business in Boston.”
McCann is also keen on Massachusetts, adding that much of its talent is coming from ”large biotech and pharma companies that have a presence here.” Pear has about 200 employees in Boston, San Francisco, and North Carolina, and the company plans to hire an undisclosed number of employees this year.
”There is a huge opportunity to ‘pear’ drugs and software,” he said. “At one point I think I said we aspire to be the most successful tech company ever named after a fruit.”