Better Therapeutics, a nutritional cognitive behavioral therapy digital therapeutics company, announced plans today to go public by merging with special purpose acquisition company Mountain Crest Acquisition Corp II.
The deal is expected to close this summer, subject to stockholder approval, and will raise $113 million for the combined company. It includes a $50 million private investment in public equity (PIPE) from investors at Farallon Capital Management, RS Investments, Sectoral Asset Management, Monashee Investment Management and other undisclosed investors, as well as $6 million from a separate private placement.
Once completed, Better Therapeutics will be valued at approximately $187 million, and the combined company will trade under the symbol BTTX.
Better Therapeutics plans to use the proceeds of the deal to advance its digital therapeutic product pipeline and to achieve Food and Drug Administration marketing authorization for its Type 2 diabetes treatment program.
WHY THIS MATTERS
The company was built on the idea that, through digitally delivered cognitive behavioral therapy, patients could create change around the root causes of cardiometabolic conditions like diabetes and heart disease.
Its lead product, BT-001, is intended to help people with Type 2 diabetes improve their glycemic control by lowering their HbA1C levels. The digital therapeutic is currently being tested in a pivotal trial, and has previously shown “meaningful improvements in glycemic control” in past pilot studies.
“Today, 34 million people in the U.S. have been diagnosed with type 2 diabetes, and another 88 million are considered prediabetic. We believe we have an immense opportunity to fundamentally change the treatment paradigm for these individuals with our PDT platform,” David Perry, cofounder and executive chairman of Better Therapeutics, said in a statement.
“Multiple studies published in peer-reviewed medical journals support our proposition that our digital therapeutics have the potential to improve blood glucose and HbA1c levels similar to drug therapies. We believe that by addressing the underlying causes of disease, our products have the potential to improve patient health while reducing treatment costs.”
In addition to BT-001, Better Therapeutics is developing products to treat Type 2 diabetes with comorbid hypertension, hypertension, hyperlipidemia and hypertriglyceridemia.
THE LARGER TREND
The digital diabetes management space is already pretty crowded. Better Therapeutics faces competition from veteran in the space Welldoc and its heavily FDA-cleared prescription BlueStar app.
Better Therapeutics also joins the rising number of startups going public through SPAC mergers. In the first quarter of 2021 alone, 10 digital health startups either went public or announced plans to go public through a SPAC deal, according to Rock Health’s latest quarterly report.
ON THE RECORD
“This is a unique time to build a company like Better Therapeutics,” said Kevin Appelbaum, cofounder and CEO of Better Therapeutics, in a statement.
“Patients, doctors and insurers have grown increasingly comfortable with digitally delivered solutions, including prescription digital therapeutics, and we are uniquely positioned to change the way some of the most prevalent and costly diseases are treated.”