Wall Street wasn’t kind to Akili Interactive, the Boston-based digital health company behind an attention-deficit/hyperactivity disorder video game treatment, during its first day of public trading.
The company went public through a merger with special purpose acquisition company, Social Capital Suvretta Holdings and began trading Monday. The company’s stock opened Monday trading at $36.06 per share and closed at $7.15 per share.
Boston-based Akili raised more than $163 million from the transaction, which will fund its growth plans for at least the next two years, according to Santosh Shanbhag, Akili’s chief financial officer.
“Hindsight being 2020, I'm glad we did the SPAC, because I think that really enabled us to raise the capital that we needed to run the business for the next 24 plus months minimum,” Shanbhag said the move also allowed Akili to become more of a household name. “If we were to continue to do the private round, one round after the other, I think the ability to access all these patients and help fulfill the needs will just take a really, really long time.”
Last year, the company completed a $110 million Series D funding round led by Neuberger Berman Funds with an additional $50 million in debt financing. The deal to go public was announced in January but didn’t close until this month.
Akili said it will invest in marketing its EndeavorRx digital therapeutic game for pediatric attention-deficit hyperactivity disorders, while expanding into additional populations. The capital will also fund other product offerings aiming to treat neuropsychiatric diseases, including autism spectrum disorder, multiple sclerosis and major depressive disorder.
The company plans to publicly launch EndeavorRx later this year. The video game requires a 30-day prescription, which can be renewed if a provider deems it effective and necessary. The therapy was cleared by the U.S. Food and Drug Administration in June 2020. European regulatory authorities also signed off on the video game in the same time period.
In 2022, there have been no initial public offerings in digital health, compared to 20 companies that went public last year, according to Digital Health Business & Technology’s quarterly database, which tracks funding and M&A deals.
Garheng Kong, founder of San Francisco-based growth equity firm, HealthQuest Capital, said the timing might have made more sense when Akili began talking about the move earlierthis year.
“There are so many dynamics at play for companies entering the public market and the SPAC process adds another layer – this deal was originally inked in January when the market looked very different than it does today,” he said. “There will still be an appetite for these companies to get public.”
Kong said many companies would be better served to wait until broader macroeconomic factors improve. A flurry of deals to end the year are unlikely, he said.
Shanbhag said the move was right for Akili.
“It was just unfortunate that the macro environment was crumbling around us,” he said. “But the fact that fundamentally, it doesn't change the way we think about our business actually just supports and strengthens the need for us to do this right now. So, maybe that's the only reason we're the only ones doing it.”