Better Therapeutics, Inc. (BTTX) is a pioneering prescription digital therapeutics (PDT) company developing cognitive behavioral therapy (CBT)-based solutions to address the root causes of cardiometabolic diseases. Founded in 2015 and headquartered in San Francisco, California, Better Therapeutics has established itself as a leader in the emerging field of digital therapeutics, with a focus on tackling some of the most prevalent and costly chronic conditions.
Business Overview and History
Better Therapeutics was founded in April 2015 with the mission to advance human health through the power of behavior change. The company's initial focus was on developing its novel form of CBT and conducting extensive research and development, including preclinical studies and clinical trials. In its early years, Better Therapeutics dedicated significant resources to these efforts, which resulted in substantial financial losses. For instance, in 2020, the company reported a net loss of $6.4 million as it continued to invest in its technology and pipeline.
A significant turning point for Better Therapeutics came in 2021 when it underwent a business combination with Mountain Crest Acquisition Corp. II. This strategic move provided the company with additional capital to support its operations and development efforts. However, the company's financial position remained challenging, with a reported net loss of $40.3 million for that year.
The company's perseverance paid off in 2022 when it completed a pivotal clinical trial for its lead product, AspyreRx (formerly BT-1). This milestone was followed by the FDA's acceptance of Better Therapeutics' de novo classification request for AspyreRx for substantive review in October 2022, marking a crucial step towards gaining marketing authorization for its first product.
In July 2023, Better Therapeutics achieved its most significant milestone to date when the FDA authorized AspyreRx for marketing. This authorization made AspyreRx the first FDA-authorized digital behavioral therapeutic delivering CBT for the treatment of a cardiometabolic disease, solidifying Better Therapeutics' position as a pioneer in the digital therapeutics space.
Financial Performance and Ratios
Better Therapeutics has not yet generated any revenue from product sales, as the company has been focused on the development and regulatory approval of its digital therapeutic solutions. For the fiscal year ended December 31, 2022, the company reported a net loss of $39.76 million, with an annual operating cash flow of negative $28.93 million and free cash flow of negative $30.11 million.
The most recent quarter's financial results show a net loss of $5.86 million, with no revenue reported. The company's year-over-year growth metrics are not applicable due to the lack of revenue generation at this stage.
As of September 30, 2023, Better Therapeutics had cash and cash equivalents of $6.6 million and an accumulated deficit of $134.3 million. The company incurred a net loss of $22.8 million and used $19.7 million of cash in operating activities during the nine months ended September 30, 2023.
Liquidity
As of December 31, 2022, Better Therapeutics had $15.74 million in cash and cash equivalents, with a current ratio of 1.37 and a debt-to-equity ratio of -16.55, indicating a strong liquidity position but a highly leveraged capital structure.
The company's research and development expenses for the fiscal year 2022 were $16.44 million, accounting for a significant portion of its total operating expenses of $38.26 million. This investment in R&D reflects the company's commitment to advancing its digital therapeutic pipeline and securing regulatory approvals.
As of September 30, 2023, the company's liquidity position shows a debt-to-equity ratio of -16.55, cash of $6.6 million, a current ratio of 1.37, and a quick ratio of 1.37. Better Therapeutics has a $50 million senior secured term loan facility with Hercules Capital, with $14.3 million outstanding as of September 30, 2023.
Better Therapeutics believes it has sufficient capital to fund its operations into the first quarter of 2024, but additional funding will be required to complete the development and commercialization of its product candidates.
Navigating Challenges and Regulatory Milestones
Better Therapeutics has faced several challenges in its journey to bring its innovative digital therapeutics to market. In April 2023, the company received a deficiency letter from Nasdaq notifying it of non-compliance with the minimum stockholders' equity requirement for continued listing on the Nasdaq Capital Market. However, the company was able to regain compliance in the following month by demonstrating compliance with Nasdaq's alternative standard of market value of listed securities.
More recently, in June 2023, Better Therapeutics received additional deficiency letters from Nasdaq, this time regarding the minimum bid price requirement and the market value of listed securities requirement. The company has been provided 180 calendar days, or until December 13, 2023, to regain compliance with these listing standards.
Despite these regulatory hurdles, the company's most significant milestone was the FDA authorization of AspyreRx for the treatment of type 2 diabetes in July 2023. This authorization, granted through the FDA's de novo classification process, created a new class of diabetes digital therapeutic devices and paved the way for Better Therapeutics to commercialize its first product.
Product Pipeline and Clinical Results
AspyreRx, Better Therapeutics' first commercial product, was authorized by the FDA in July 2023 for the treatment of Type 2 Diabetes (T2D) in patients 18 years or older. The mechanism of action embedded in AspyreRx is a novel form of CBT developed by Better Therapeutics, targeting the specific behaviors that cause and contribute to the progression of T2D.
The company's clinical trial for AspyreRx achieved statistically significant and clinically meaningful changes in both the primary and secondary endpoints. The primary efficacy endpoint, which was the difference in mean change in A1c from baseline after 90 days of treatment, showed a highly statistically significant improvement in A1c relative to the control group (-0.40, n=610, p<0.001). The secondary efficacy endpoint, the mean change in A1c from baseline at 180 days, also demonstrated a sustained and statistically significant change relative to the control group (-0.30, n=517, p=0.01).
Importantly, half of the AspyreRx patients achieved a meaningful reduction in A1c defined as a 0.4% reduction or more, with a mean A1c reduction of 1.3% within this subset. The clinical trial also provided evidence that greater engagement in the CBT features of AspyreRx led to greater reductions in A1c, supporting CBT as a mechanism of action.
In addition to AspyreRx, Better Therapeutics' pipeline includes programs for the treatment of hypertension, hyperlipidemia, Metabolic Dysfunction-Associated Steatotic Liver Disease (MASLD), Metabolic Dysfunction-Associated Steatohepatitis (MASH), and chronic kidney disease.
In September 2023, the company completed enrollment in its real-world evidence studies to evaluate the long-term effectiveness and healthcare utilization changes associated with the use of AspyreRx for the treatment of T2D.
Furthermore, Better Therapeutics achieved positive top-line results in its LivVita study, a clinical study evaluating the feasibility of its digitally delivered CBT to reduce liver fat and improve liver disease biomarkers as a potential treatment for MASLD and MASH. The study met its primary endpoint, showing a statistically significant positive signal with an average relative reduction in Magnetic Resonance Imaging-Proton Density Fat Fraction (MRI-PDFF) of 16% (p<0.01) in the intent-to-treat population (n=19). The study also showed statistically significant mean reductions in alanine transaminase (ALT) and FAST Score, no serious adverse events or device-related adverse events, and high engagement and patient satisfaction with the treatment.
Competitive Landscape and Future Outlook
Better Therapeutics operates in a rapidly evolving and highly competitive digital therapeutics market, with several companies vying to develop and commercialize innovative solutions for cardiometabolic conditions. Key competitors include Omada Health, Welldoc, and Livongo (acquired by Teladoc Health).
The company's ability to establish widespread adoption and reimbursement coverage for AspyreRx will be critical to its long-term success. Better Therapeutics is currently engaged in business development efforts to maximize the value of AspyreRx and its platform, exploring partnership opportunities with pharmaceutical, medical technology, and technology companies that have a strategic interest in digital health.
Looking ahead, the company's future growth and profitability will depend on its ability to successfully commercialize AspyreRx, secure regulatory approvals for its other product candidates, and continue to develop innovative digital therapeutic solutions that address the significant unmet needs in the cardiometabolic disease landscape.
Risks and Uncertainties
As a clinical-stage digital therapeutics company, Better Therapeutics faces a variety of risks and uncertainties that could impact its long-term success. These include, but are not limited to:
1. Regulatory Approval Risks: The company's ability to obtain and maintain regulatory approvals for its product candidates is crucial, and any delays or failures in this process could significantly affect its growth and financial performance.
2. Commercialization and Adoption Challenges: The successful commercialization of AspyreRx and the company's other products will depend on its ability to drive adoption among healthcare providers and patients, as well as secure favorable reimbursement coverage from payers.
3. Competition and Technological Advancements: The digital therapeutics market is highly competitive, and the company must continually innovate and improve its products to stay ahead of its competitors and technological developments.
4. Financing and Capital Requirements: As a pre-revenue company, Better Therapeutics will require significant additional funding to support its research, development, and commercialization efforts, and its ability to raise capital on favorable terms is critical to its long-term success.
5. Reliance on Key Personnel: The company's success is heavily dependent on its experienced management team and the ability to attract and retain talented employees, particularly in the fields of software development, clinical research, and regulatory affairs.
Conclusion
Better Therapeutics is at the forefront of the digital therapeutics revolution, leveraging its proprietary cognitive behavioral therapy platform to address the root causes of cardiometabolic diseases. The company's FDA authorization of AspyreRx for the treatment of type 2 diabetes represents a significant milestone, paving the way for the commercialization of its first product and the potential expansion of its digital therapeutic solutions into other high-burden chronic conditions.
As Better Therapeutics navigates the challenges of regulatory approvals, market adoption, and competition, its ability to execute on its strategic vision and capitalize on the growing demand for effective, accessible, and affordable digital health solutions will be critical to its long-term success. Investors will closely monitor the company's progress in securing reimbursement coverage, expanding its product pipeline, and establishing partnerships that can accelerate its growth trajectory.
Despite the risks and uncertainties inherent in the clinical-stage digital therapeutics space, Better Therapeutics' innovative approach, experienced leadership team, and strong pipeline of product candidates position the company as a compelling long-term investment opportunity in the rapidly evolving healthcare technology market. The successful launch of AspyreRx and the positive results from its clinical trials provide a solid foundation for the company's future growth, but careful management of its financial resources and strategic execution will be crucial as Better Therapeutics works towards profitability and market leadership in the digital therapeutics industry.