Akili Merges with Virtual Therapeutics to Form a Leading Digital Mental Health Company

In a significant move within the Digital Health sector, Akili announced a merger with little-known Virtual Therapeutics in a go-private deal to create a larger, diversified digital mental health company. This strategic merger comes just a month after Akili revealed plans to reduce its headcount by 46% while evaluating various strategic options.

About Akili

Founded in 2011 in the US, Akili is pioneering the development of cognitive treatments through innovative technologies. The company's unique approach leverages technologies designed to directly target the brain, establishing a new category of medicine that combines clinical validation with entertainment. Akili's platform is powered by proprietary therapeutic engines designed to address cognitive impairment at its source, informed by decades of research and validated through rigorous clinical trials. Believing that effective medicine can also be engaging, Akili delivers its products through captivating action video games. For more information, visit Akili Interactive (https://www.akiliinteractive.com).

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About Virtual Therapeutics

Founded in 2015, Virtual Therapeutics is a digital health company delivering scalable, accessible, affordable, and personalised solutions for mental health and mental fitness. Leveraging extensive expertise as a game developer, the company creates rich, appealing experiences that blend proven therapeutic techniques with modern gameplay mechanisms to delight and engage users. Virtual Therapeutics uses a powerful cloud-based platform to gather and analyse various data streams to continuously measure, validate, and report effectiveness, ensuring a seamless and turnkey experience for users and partners. For more information, visit Virtual Therapeutics (https://www.vthera.com).

Akili’s Recent Challenges and Strategic Shifts

Akili has faced significant challenges over the past year. In September, the company laid off 40% of its staff and transitioned from a prescription-based business model to a consumer-led subscription model to reduce its reliance on payers. This restructuring included eliminating its marketing and medical affairs teams and significantly scaling back promotional activities for its ADHD treatments, EndeavorRx and EndeavorOTC.

Despite making headlines in 2020 with FDA clearance for EndeavorRx, a video game designed to treat pediatric ADHD, and going public in 2022 via a SPAC deal, Akili struggled to build a sustainable business model. In April, Akili announced it would wind down its existing commercial operations and focus on a licensing deal with Japanese pharma company Shionogi Inc. (U.S.) while seeking the best path forward.

Details of the Merger

The merger with Virtual Therapeutics is a strategic move following Akili's recent restructuring. Under the terms of the deal, Akili shareholders will receive $0.0434 per share of common stock in cash, representing a roughly 4% premium to Akili's closing price on Tuesday and an 85% premium to its share price on April 29, the last trading day before Akili announced it was exploring strategic alternatives. The deal is expected to net Akili’s shareholders approximately $34 million.

The Bigger Picture in Digital Health

Akili's struggles reflect broader challenges within the #digitalhealth industry, which saw a surge in investor interest and funding during the Covid-19 pandemic but has since faced significant difficulties. For example, Better Therapeutics recently sold its assets after failing to establish a sustainable business model for its type 2 diabetes app, while Cue Health , a home diagnostics startup, filed for bankruptcy. There will be more!

Looking Ahead

The merger between Akili and Virtual Therapeutics represents a strategic consolidation to create a robust, diversified digital mental health company. By combining their expertise and resources, the new entity is well-positioned to advance the development and delivery of innovative, engaging therapeutic solutions. This merger underscores the importance of adaptive business models and strategic partnerships in navigating the evolving digital health landscape and achieving long-term success.