In January 2023, Boston-based digital therapeutics startup Akili announced plans to lay off 30% of its staff, affecting 46 employees, as part of a strategic move to extend its cash runway. These layoffs, scheduled to be completed by the end of the first quarter, align with an operating plan approved by the company's board of directors. This article examines the reasons behind the layoffs, their implications for the company, and the potential broader impact on the industry.
Akili Labs' layoffs were driven by the need to extend the company’s cash runway amidst a challenging economic climate, as noted by CEO Eddie Martucci. The decision was part of a broader strategy that included reprioritizing the company’s development pipeline. Although specifics on industry shifts or analyst insights are not detailed, the move aligns with similar trends in the behavioral health sector, indicating that broader economic and industry dynamics are influencing company strategies.
The layoffs are expected to cost Akili Labs between $1.5 million and $2.5 million, with an anticipated extension of the cash runway through the first quarter of 2025. This financial adjustment aims to stabilize the company’s finances, projecting operating expenses for 2023 to be between $55 and $60 million. Furthermore, Akili's strategic refocus will center on developing products for autism spectrum disorder and adult ADHD, continuing the momentum from its FDA-cleared EndeavorRx for pediatric ADHD in 2020. These strategic shifts are designed to enhance operational efficiency and support sustained development efforts.
The layoffs at Akili Labs could indicate a broader trend within the digital therapeutics industry, where companies grapple with challenges in generating significant revenue and achieving reimbursement for their products. The difficulties in gaining regulatory and payer recognition for prescription digital therapeutics may affect adoption rates and the overall impact on healthcare. This situation may lead to industry-wide shifts towards consolidation or reevaluating business models to effectively navigate the healthcare landscape.
The layoffs at Akili Labs are a strategic response to extend its financial stability and focus on key product areas like autism and adult ADHD. These changes may influence the company's future and standing in the digital therapeutics industry, particularly in terms of revenue generation and reimbursement challenges. The broader implications could include industry consolidation or a reevaluation of business models, reflecting a possible shift in how digital therapeutics companies operate within the healthcare sector.
