Why 2023 May Be the Year for This Biotech Co.

Addiction is a serious problem and one for which drugs are often largely to blame. However, drugs — which is to say, the right drugs, used in the right ways — can also play a large part in the solution.

Few companies are more convinced of the inevitability of this approach to treatment than Awakn Life Sciences Corp. (AWKN:NEO; AWKNF:OTCQB). Founded with the goal of bringing surcease of suffering to the 285 million people who struggle with alcohol addiction each year, the company is at the forefront of addressing this US$25B market.

Awakn was founded in 2020 by a team of experienced researchers and industry professionals who saw a need for more effective, personalized treatments for addiction and mental health disorders.

Awakn’s Treatment is Unique

Many current treatments, such as 12-step programs and other group counseling, are not tailored to the unique needs and characteristics of individual patients, making it difficult for them to achieve long-term recovery.

Currently, three medications are approved by the U.S. Food and Drug Administration to treat alcohol use disorder: acamprosate, disulfiram, and naltrexone. However, studies have found that most people attempting traditional therapies require between two and five attempts to actually shake their addiction.

In addition, many existing treatments have not been thoroughly tested and validated through clinical research, leaving doubt about their effectiveness. Awakn has staked its reputation on developing trail-verified therapies that incorporate scheduled substances like the drug ketamine, which has a long history of both veterinary and recreational use.

In addition to its research and development efforts on the clinical side, Awakn is working to improve access to addiction and mental health care. The company is partnering with healthcare providers, payers, and other stakeholders to develop and implement innovative models of care that are more accessible and affordable for patients.

This includes the use of telehealth and other digital technologies to deliver care remotely, as well as the development of new payment models that make it easier for patients to access the treatments they need. While the company has made large strides in deploying these methods in its own clinics, it is also bundling its technologies and techniques for licensed distribution to other providers.

The Economist touched on Awakn's current clinics in a recent video, marking it as one of the five stories to watch out for in 2023. In it, Natasha Loder, the health policy editor for The Economist, said, "2023 is going to be a really pivotal year for psychedelic medicines."

The Catalyst: Clinic Expansions and a Subsidized Phase III Trial

The past month has been quite busy for Awakn, with the expansion of its Oslo clinic and the announcement of a second Norwegian clinic in Trondheim. The company also announced that its ‘Ketamine for Reduction of Alcohol Relapse’ (KARE) trial has reached Phase III with the assistance of the UK’s National Health System (NHS) and will take place at seven sites across the Kingdom, where Awakn already operates two clinics in London and Bristol, and has planned to open two more in Manchester and Dublin during 2023.  

"More than two million UK adults have serious alcohol problems, yet only one in five get treatment. Unfortunately, three out of four people who quit alcohol will be back drinking heavily after a year,” explains Professor Celia Morgan from the University of Exiter. According to the latest report from Polaris Market Research, the global addiction treatment market was valued at US$8.28 billion in 2021 and is expected to grow at a CAGR of 6.4% during the forecast period.

“If this trial definitively establishes that ketamine and therapy works, we hope we can begin to see it used in NHS settings," Morgan explains. 

Awakn CEO Anthony Tennyson concurs: “With two Awakn clinics already open in the UK and more in Europe, we are already seeing the incredible benefits of this treatment for our clients on an off-label basis."

“Awakn therapeutics for treating addiction have been proven to be highly efficacious. In our Phase II trial of AUD sufferers, our approach delivered 86% abstinence in the six months post-treatment versus 2% abstinence at the trial start and 25% in the current standard of care,” he continues.

“To put that in context, study participants went from being sober on average seven days a year to being sober on average 314 days a year on an annualized basis.”

“We are focused on addiction because there are few (if any) people whose lives have not been touched by addiction. Alcohol Use Disorder affects 285 million people globally. It destroys families, lives and, sadly, often kills.”

These positive developments follow the company’s 27% revenue growth in Q3 2022 and suggest that while the business is still in the nascent stages of growth, its underlying value proposition is well advanced and nearing a level of sustainable maturation.

STIFEL GMP analyst Andrew Partheniou recently rated the company a speculative Buy on news of Awakn’s Phase III trial, stating in a report that “government funding for 66% of the total trial cost” is “significantly reducing AWKN's out-of-pocket expense to just over US$1 million.”

His report goes on to detail how “AWKN signed its third licensing agreement in North America, this time with Nushama, an operator in New York City. The offering is expected to be attractive to patients, providing better efficacy at a fraction of standard offerings (min. US$50k in NYC vs. AWKN at US$12.5k) with Nushama paying AWKN an annual fee and undisclosed royalty.”

Partheniou is optimistic that while clinic revenue could reach US$100 million by 2024, its real growth will come from licensing agreements. However, licensing and ketamine therapy aren’t the only tools that Awakn has to work with.

In a July report, H.C. Wainwright & Co. Analyst Patrick Trucchio focused on the company’s concurrent trials involving the equally ‘circumspect’ pharmaceutical MDMA. “We estimate (that MDMA-assisted therapy) could have blockbuster drug potential based on the significant unmet medical need and evidence generated to date pointing to the potential of MDMA-assisted therapy in a variety of mood disorders,” Trucchio explained.

“Moreover, Awakn’s MDMA-assisted therapy has generated promising Phase 2a data in AUD (alcohol use disorder), which follows the validation of the approach in PTSD in a late-stage program being conducted by MAPS, a non-profit organization based in the U.S.”

Awakn is currently pursuing four R&D programs, three live and one paused. The live programs focus on the following:

• Repurposing ketamine combined with therapy to treat AUD, with Phase II complete and Phase III planned for 2023
• Repurposing ketamine combined with therapy to treat behavioral addictions, with feasibility activity ongoing and Phase II planned for 2023
• Developing MDMA in partnership with Catalent to address its known IP and pharmacokinetics challenges in order to increase the probability of developing MDMA into a successfully marketed drug to treat addictions with trauma as a causative factor.

The fourth, paused, program involves developing New Chemical Entity (NCE) candidates with properties similar to MDMA to treat addictions and mental health conditions with the poorest current standards of care, trauma as a causative factor, and the most significant total addressable markets.

Ownership and Share Structure

Awakn’s management owns 21.22% of the company’s 35,602,993 fully-diluted structure, which consists of 28,799,011 common shares, 4,722,064 warrants, 1,996,746 outstanding options, and 35,172 DSUs.

Co-founder and Head of Psychedelic Medicine Dr. Ben Sessa owns the most, at 7.74%, with 2.23 million shares. Co-founder and chair George Scorsis is next at 1.84%, with 0.53 million shares. Nonexecutive Director Steve Page is at 0.24% with 0.07 million shares. Co-founder and CEO Anthony Tennyson is at 0.08%, with 0.02 million shares, and the other non-executive director, Professor John Papastergiou, is at 0.03%, with 0.01 million shares. 

OrbiMed Advisors LLC files as an insider, with an 8.35% equity stake (2,403,550 regular shares) and 989,583 warrants at US$0.68, while other warrants are all US$1.20 and higher.

According to Reuters, 18.27% of shares are held by institutions and strategic investors, 8.35% by investment managers, and 9.93% by individual investors. 

The company is covered by a myriad of analysts, including previously mentioned Andrew Partheniou of Stifel and Patrick Trucchio of H.C. Wainwright & Co. The company has also been reviewed by Jason McCarthy of Maxim Group and technical analyst Clive Maund of Clivemaund.com. You can click "See More Live Data" in the data box above to read more of what they are saying.

Other institutional investors of note include Iter Investments, Palo Santo, Negev Capital, Neo Kuma, TD Veen, JLS, and Ambria. The company’s market cap is US$ 7,354,000.

Disclosures:

1) Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. They members of their household own securities of the following companies mentioned in the article: None. They or members of their household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Awakn Life Sciences Corp. Please click here for more information.

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