Do you want more funding?
Corey McCann is the cofounder and CEO of Pear Therapeutics which is a software-based digital therapeutics platform designed to treat disease and enhance the efficacy of pharmaceuticals. The company has raised over $250 million from investors such as Temasek Holdings, 5AM Ventures, Softbank Vision Fund, EDBI, and Trustbridge Partners to name a few.
In this episode, you will learn:
- Corey McCann’s top advice for other entrepreneurs
- The Pareto Principle
- Mastering fundraising from an investor’s perspective
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About Corey McCann:
Corey M. McCann, MD, PhD, is the President and CEO of Pear Therapeutics, a pioneer in prescription digital therapeutics, as the first company to receive market authorization for software to treat disease.
Previously, Corey McCann was an investor with MPM Capital, where he evaluated new healthcare investment opportunities, managed relationships with strategic partners, and oversaw strategy and execution at portfolio companies.
Prior to MPM, Corey McCann was an Engagement Manager with McKinsey & Company, where he advised pharmaceutical, medical device, and biotechnology companies on the acquisition, development, and commercialization of life science technologies. Corey McCann led McKinsey’s central nervous system expertise group, advising clients across the healthcare value chain.
Corey McCann has previous investment experience with RiverVest Venture Partners, where he performed diligence on early stage investments, and at NeuroInsights, where he evaluated brain-related technologies. Corey McCann is also a co-founder, advisor, or Board Director at AgNovos Healthcare, Alcyone Lifesciences, Dragonfly Sciences, Edumedics, Resolute Bio, Selexys Pharmaceuticals, and Zillion Health.
Corey McCann trained as a physician-scientist via the Medical Scientist Training Program. For his PhD, he studied the molecular biology of synapses at Harvard University and at Washington University in St Louis. Corey McCann was also a post-doctoral researcher at the Massachusetts General Hospital where he developed imaging techniques for the visualization of the brain.
Corey McCann received his MD from Washington University in St. Louis. Corey McCann graduated summa cum laude from The Pennsylvania State University where he was an Evan Pugh Scholar, receiving a BS in Biology with minors in neuroscience, biochemistry, and molecular biology.
Connect with Corey McCann:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today, I’m very excited about the guest that we have. We’re going to be learning quite a bit about software, about therapeutics, and you name it. Without further ado, let’s welcome our guest today. Corey McCann, welcome to the show.
Corey McCann: Alejandro, thank you for having me. It’s my pleasure.
Alejandro: So originally born in a small town in Pennsylvania. How was life growing up?
Corey McCann: I grew up in a very small town called Oley, Pennsylvania, outside of Philadelphia, right at the borderline of Philadelphia suburbia. I’m a big-time Philadelphia Eagles fan. I think beyond that, it was a very traditional American upbringing.
Alejandro: Very cool. You got into Penn State, but what got you into biology?
Corey McCann: I guess I had come from a scientific upbringing. My mother was a small college biology professor growing up. While most kids were out being pushed toward sports, I got pushed toward science, and I can remember the excruciating task of the science year project. It was an annual ritual, so I guess science was ingrained in me from a very young age.
Alejandro: After college, you decided to go the route of more neural science. Is that right? What pushed you in that direction?
Corey McCann: I’ve always been really interested in the brain, interested in why the brain thinks about what it thinks about. I put in a lot of years of schooling. I trained as what’s called the physician-scientist. It was one-part traditional doctor training. I’m an MD by training, and I also did lots and lots of bench-side research, and that was all in cellular and molecular neuroscience.
Alejandro: Talking about how the brain functions, in this case, how did your brain function? How did you decide to go from being a researcher to getting on the investment side?
Corey McCann: I think a recurring theme for me is being a jack of all trades and master of none. But I really do believe there’s value in the world today studying at the interface between different disciplines. I think, for me, whether that was science and medicine or whether that was science and investing, I think if you look at a lot of the people who are able to really, deeply impact society, they’re not just peer-play experts, but they straddle multiple disciplines. As I was starting to look at how these different technologies go from just cool science projects and turn into self-sustaining companies that are able to impact people. I saw venture capital in the investment world as being the discipline that’s in charge of deciding what moves forward and what doesn’t. I did a lot of work with a small firm called RiverVest Venture Partners. I was one of the people at the front of the line who turns the pile of lots and lots of pitch decks into a smaller pile of pitch decks for deeper exploration. I think across lots of those opportunities, I got very compelled that starting companies and allocating resources for companies was something that I was highly compassionate about.
Alejandro: In your case, you were an associate at RiverVest. Then, you went to McKinsey to do consulting, and then MPM Capital. You have two of the big things that arm you to be a Swiss army knife when it comes to being on the operational role, perhaps as a founder and executing a company from the ground up. In this case, you perhaps developed that pattern recognition and perhaps also the way to grab a big problem and break it down into smaller problems. How do you think that consulting side and investment side has armed you with the right set of tools to execute on the operational role?
Corey McCann: I feel a lot of these things as opportunities for skill-building. I think the clinical medicine piece allowed me to understand how these different technologies impact patients and how they’re utilized. I think the science piece helped me to really understand what it looks like to explore and answer questions. And as I think about the later chapters, I happen to really love problem-solving, and one of the things that I love about being a consultant at McKinsey is that you have the ability to solve problems incredibly rapidly and bring them to impact, so thinking about how to break down and structure problems, thinking about how to communicate what are very complex situations and solutions from multiple stakeholders. I absolutely think about that as part of my McKinsey training. If you ask the people that I work with, I also really love PowerPoint slides. So, that’s been deeply ingrained in my mind. As I think about the venture world, there’s a lot to be understood in terms of how a venture portfolio operates and what it’s like to allocate resources into development stage companies. I think being able to almost put myself in the shoes of the investor has been a skill that has been really, really valuable in company creation and company development.
Alejandro: Let’s do a little bit of a deep dive into the venture world, and more specifically, into your baby, PEAR Therapeutics. Tell us about how this company comes together.
Corey McCann: I’ll try to bring all of the chapters together. If you think deeply about the way that the brain learns and about the way that the brain is treated for many different disease conditions, it’s at the interface of some sort of a molecule and experience. I guess a really good example there is if you’re to go to the physician because you’re depressed, you’ll likely receive an SSRI or a specific drug, but that drug is only indicated to be used in combination with talk therapy. It’s because the brain’s activity patterns work together with these different molecules, and that’s how you get to impact. As an investor, I was looking at lots and lots of different new drugs for different brain-related conditions, and as you probably know, those have been some of the more difficult conditions to treat across all of the conditions in medicine. There are lots of stories about the developmental-stage drugs failing in very late stages when it comes to treating brain-related conditions. It occurred to me that the thing that people hadn’t tried was to really turn that cognitive experience into the equivalent of a drug. This was the early kernel of what, at the time, we thought of as Software as a Drug. That space has become and called Digital Therapeutics. What we’ve tried to build at PEAR is really the company that develops that space and brings digital therapeutics to patients.
Alejandro: Let’s talk about what the early days were like for PEAR Therapeutics.
Corey McCann: When we first started looking at this space, we really thought that there was an opportunity to start a fund. So, as we looked at the space, we went out, and we identified several hundred different interesting technologies, but we didn’t see management teams that were really poised to bring these technologies with the rigors that it takes to ultimately make the mainstream medicine. Fairly early on, we decided that a fund structure was absolutely not the right approach here but that there was the opportunity to build an aggregator. What we did was we went out, and we effectively rolled up or in-licensed many of the interesting technologies that we saw again in academia and small companies. We brought them onto a shared platform, which was built within PEAR Therapeutics. One of the things that is very interesting about this space of digital therapeutics is that it’s almost a hybrid between a tech space and what it takes to develop a pharmaceutical product. So, we built up what were hybrid sets of skills. We have tech experts; we also have healthcare and pharma experts, and we tried to meld those two disciplines within the company’s DNA from Day 1.
Alejandro: In this case, for a company of this nature, you need quite a bit of capital to support the growth and to really build it up. How much capital have you guys raised to date?
Corey McCann: We’ve raised approximately $250 million. We just closed an approximately $80 million Series D led by SoftBank.
Alejandro: Nice. Very well done. Congratulations. For the people that are listening now to get an idea on perhaps the scope or the size of PEAR Therapeutics, anything you can share around employees or anything else?
Corey McCann: Absolutely. We’re approximately a 200-person company. Pre-COVID, we were split between Boston and San Francisco. We really, again, think about ourselves as sort of the first fully-integrated digital therapeutics company. What I mean by that is that we have people that discover these new digital therapeutic products. We have a team or teams that develop them within clinical trials. We have teams that work with the regulators like FDA, and then we have a commercial footprint, as well. We have sales teams that work with clinician prescribers, and then also teams that work with payers – said differently: insurance companies.
Alejandro: So, in this case, for you guys, there was a before and an after with COVID, so before COVID, the people that would be on the cover of magazines, it would be the good-looking, SaaS, AI-type of stuff, and now it seems that after COVID, now the people that are on the magazines are doctors and nurses. How would you say that this new, perhaps, reality or normal that we’re heading into has impacted your business?
Corey McCann: Personally, there has never been a cooler time to be a scientist. It’s just been incredibly refreshing to see, in many cases, people that I know personally save the world. I don’t mean to say that to be hyperbolic in any way. It’s just been amazing to see the efforts to bring together what was amazing science and turn that into some of the first COVID vaccines. From the perspective of PEAR, this has really pushed remote care and remote access to healthcare to the forefront of everyone’s thinking, investors included. As we think about digital therapeutics, we have always thought that digital therapeutics would ultimately be prescribed via a telemedicine encounter. So, if you think about these different ways of treating disease, the telemedicine encounter offers a way, which is just a brief window into the patient and to do it remotely and with a human on the other side of the encounter. The digital therapeutic sits remotely in-between all of the other times that the patient just can’t be interacting with their telemedicine provider. We always knew that this was the case. The moment that COVID rolled around, telemedicine exploded, and in order to keep up with that trend, we built what is the first telemedicine platform where patients can get diagnosed and prescribed a digital therapeutic without ever leaving their home.
Alejandro: The future, it’s incredible how things are shaping up now and how fast they are shaping up in this world that we’re now living in. If you had the opportunity to close your eyes and wake up in a world where the vision of PEAR Therapeutics is completely realized. What does that world look like?
Corey McCann: Our vision is relatively simple. We want software to be a mainstream medicine. As I close my eyes and I think about that vision of the future, we see in the near-term software becoming a mainstream treatment for the condition of many different brain-related diseases. Our first products are in different forms of addiction and insomnia. So, we have three FDA-approved products at the moment. We see those as the first wave, and we see a whole wave of products in different psychiatric and neurologic conditions thereafter. But we really like to dream big. We see several hundred opportunities extending well beyond different brain-related diseases where software can either work with drugs or work on its own to directly treat these different diseases. As I think about that version of the future, I’m heartened by a world where the patient expects software; the clinician expects to prescribe that software, and those expectations come together to bring this to the masses.
Alejandro: One of the things that I want to ask you now is one of the typical questions that I ask the guests that come on the show, and that is, if you had the opportunity to go back in time and have a chat with your younger self, Corey, maybe that Corey that was thinking about launching a business, what would be that one piece of business advice that you would give to yourself before launching a company and why given what you know now?
Corey McCann: I think I would remind myself to check my ego at the door. I think it’s easy to think that creating a business or creating a company is about the good moments. I think as you’re building the company, there are lots of good moments, and at times, it can start to feed into your ego. Building a company is probably much more about your resilience and the way that you deal with all of the either neutral or not-so-good moments in-between the good moments. I think until you’re in the trenches, you just don’t quite have the right frame of reference as to how much good to expect, how much neutral to expect, and how many headaches to expect. So, I think if there’s one thing that I could do, I would just reset my expectations to know that success in company creation is about the ways in which one deals with adversity, much, much more so than it is about the ways that one deals with success.
Alejandro: And in your case, how have you learned to deal with adversity because I’m sure there are a lot of entrepreneurs right now that are listening, and we all know that the journey of building and scaling a company is not a straight line; it’s quite bumpy. What was that lesson for you to learn about dealing with adversity?
Corey McCann: It’s a bit contrite to say, but fail fast and iterate. I don’t just mean when it comes to the creation of a software product. I mean with regard to everything that one does in the business. I think the way that I’ve been able to continue to keep things moving forward is to make very rapids turns, and that can mean very rapid turns on an investment document; it can mean making very rapid turns on a clinical development document. I think trying to get to the Pareto Principle embedded in any task, or the 80/20 is what’s at stake – but then, also, since noes and negative results are so frequent, being disciplined to be able to learn from all of those noes. I think when you put those two things together, you wind up with what is a very iterative engine across any task that you’re looking to optimize, be it fundraising, be it team building, or be it execution of a core business. Those two things, for me, are things that I hold very near and dear to my heart.
Alejandro: Talking about the noes, we can relate that right away with fundraising. In fundraising, you guys have been quite successful. Was there a turning point because I’m sure that during the early days, raising money was not that easy. At what point did you realize that it was starting to get a little bit easier when it came to knocking on doors of investors?
Corey McCann: I don’t know that there was a singular turning point. I think across each one of our fundraising rounds, we’ve looked to work with the best investors, and we’ve looked to use their risk capital in order to remove risk from the business. So, maybe this brings us full-circle and back to thinking like an investor. Investors, even if they’re early-stage investors, perseverate on risk. I think having a very clear and sober appraisal of the risk remaining in the business at any given point gives you your next inflection point and gives you what you should be looking to address with your current fundraise. I think we’ve been very disciplined and very methodical about moving from stage-to-stage-to-stage and discharging a few risks along the way.
Alejandro: When we’re talking about going from stage-to-stage, is it like a big transition where you go from early-stage to growth stage? For example, you, as a leader, that transformation that you need to experience in parallel with the business, how challenging is that?
Corey McCann: I think it’s entirely specific to the business. One of the things that we’ve done deliberately is to bring investors from different disciplines into the company. We have some best of breed, biotech investors, some best of breed tech investors, some best of breed medical device investors, and then even a big pharma investor in Novartis. I think expectations for each one of those sets of investors are very different. For example, in biotech, it’s not surprising to do a $100 million Series A financing, whereas, in tech, it would be highly surprising to do a $100 million Series A investing. So, I think just being quite explicit and over-communicating about every investor’s expectations for the business and getting them all aligned, that’s been something that we think about a good deal.
Alejandro: Very cool. What’s in store, Corey, for PEAR Therapeutics? What’s coming?
Corey McCann: We’ve got three commercial products. It’s our reSET and reSET-O products for different addiction conditions and/or some risk product for chronic insomnia. In the near term, we are laser-focused, again, on making those products mainstream medicine. What that means for us is that we continue to develop data, in particular, around the cost-saving benefits of using the products. We continue to roll the products out to additional prescribers, and we are very highly focused on working with insurance companies. In my world, that would be called market access. If we think about identifying the key risks for the business, our key risk at the moment is market access – said differently: it is communicating our value proposition to insurance companies. That is our near-term goal. The moment we’re able to take the risk out of that part of the story, we’ve built a platform that can create hundreds of assets, and the success from our initial assets has positive read-through to everything else in the portfolio. So, it’s quite an exciting time.
Alejandro: That’s amazing. Very, very cool stuff. Corey, for the people that are listening, what is the best way for them to reach out and say hi?
Corey McCann: You can learn more about PEAR at peartherapeutics.com. You can also reach me at [email protected].
Alejandro: Amazing. Corey, thank you so much for being on the DealMakers show.
Corey McCann: Thank you, Alejandro. It’s been a pleasure.
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