Biotech's Novel Thin Formulation Improves Veteran-Aiding Treatment

Awakn Life Sciences Corp. (AWKN:NEO; AWKNF:OTCQB) revealed today further details regarding its August 2022 announcement that it had "signed a twelve-month option agreement with a leading drug development, manufacturing, and delivery systems company to in-license a proprietary formulation and route of administration for ketamine."

Awakn is a Canadian biotechnology company focusing on researching, developing, and commercializing therapeutics to treat addiction with a near-term focus on Alcohol Use Disorder.

New AUD Treatment Needed

Few people, if any, enjoy getting stuck with needles. Research finds trypanophobia (fear of needles) nearly ubiquitous among children, and 30% of young adults retain this debilitating condition. Needles cause accidents that can scar medical professionals and patients physically and mentally, triggering or even causing PTSD for both those who administer needle-based therapies and those who receive them.

Even addicts of needle-based drugs put off needed institutional medical procedures because they fear medical professionals will use needles. This reality can make existing injection-administered psychedelic anti-addiction therapies somewhat counterintuitive, if not completely untenable.

One considerable market for such therapies is veterans. A 2015 report from Gregg Zoroya in USA Today (video) explains that even back then, "every year, 20,000 soldiers [were] going to the Army's substance abuse clinics."

In July,  Jason McCarthy from Maxim Group touched on the possibilities of Awakn. He said, "Considering that private addiction treatment comes with a 70%-80% fail rate and treatment can cost north of US$30K, the opportunity for Awakn to improve this model is significant."

"After 14 years of war, America's soldiers can be suffering from any number of issues; they can have post-traumatic stress disorder, traumatic brain injury, be having chronic pain with wounds or injuries, and they may even have thoughts of suicide. A nexus for these problems can be the abuse of alcohol or pain medication."

"The most abused drug is alcohol still, and it's been that way practically forever in the Army," says Wanda Kuehr, Former Chief of Clinical Services, Army Substance Abuse Program.

Despite this persistent and growing need, the Surgeon General’s Office hasn’t overseen Alcohol Use Disorder (AUD) treatment in the army since 2010, when restructuring foisted the responsibility onto base commanders. As a result, many clinical directors left the service completely, and their staff of counselors followed.

The Right Formulation, The Right Model, and the Right Market

In July,  Jason McCarthy from Maxim Group touched on the possibilities of Awakn. He said, "Considering that private addiction treatment comes with a 70%-80% fail rate and treatment can cost north of US$30K, the opportunity for Awakn to improve this model is significant."

Awakn operates its own clinics overseas while licensing its technologies and modalities to entities in the United States. In this manner, it's building an international brand name as a service provider while leveraging the scale economics of a licensing structure.

One such licensee is Revitalist Lifestyle and Wellness Ltd. (CALM:CSE; RVLWF:OTCQB;4DO:FSE), with a clinic expecting to see patients suffering from AUD.  Revitalist is delivering Awakn's proprietary ‘Kare' methodology, which resulted in an average of 86% abstinence during the six months post-treatment in a Phase IIb clinical trial.

"Many of our Veterans are silently suffering in insurmountable amounts with addictions often leading to loss of work, homelessness, and death. I am grateful to Awakn and Prof. David Nutt for taking a stand to actively intervene, bringing better science and advocacy for those struggling from addictions," says Revitalist CEO Kathryn Walker.

Walker co-hosted the webinar How psychedelic therapy can help Veterans suffering with Addiction with Nutt on January 12. Since 2018 Revitlist has grown to offer nine clinics in six states, becoming one of the largest publicly-listed, ketamine-focused clinic operations in the United States.  

Walker sees great things coming from the synergy between "Prof. Nutt and Awakn's research expertise and Revitalist's advancements with helping Veterans." A needle-free administration regimen for psychedelic compounds widens and enhances the market for Awakn's therapies at both the wholesale and individual levels.

The Catalyst: Results Could Potentially Lead to Global Licensing Agreement

Today's release explained that “the formulation and route of administration will be optimized for commercialization and has the potential to deepen the intellectual property (IP) moat for Awakn's lead clinical development program, Project Kestrel, which targets AUD."

The company explained that Awakn "has initiated an investigative study to establish the dissociative effect of a proprietary and patent-pending formulation of (S)-ketamine and optimized route of administration to support commercialization in due course."

Trial participants (harmful drinkers) will be administered (S)-ketamine delivered via a proprietary oral thin film formulation to evaluate the dissociative effect garnered from the formulation and look at alcohol cravings from participants. Mechanistic factors, including electroencephalographic (EEG) markers of increased neuroplasticity, will also be addressed.

In a December posting, Andrew Partheniou from Stifel rated the company a Speculative Buy and noted that he considered Awakn undervalued.

Positive results will potentially lead to a global licensing agreement for Phase I data of the patented oral thin film (S)-ketamine formulation and result in Awakn advancing to a larger phase II b study with global exclusivity rights to use the thin film formulation in the treatment of all addictions.

Mass adoption of intravenous-delivered ketamine-assisted therapy is highly limited by the requirement for specific infrastructure and clinicians to administer it and the terror its mode of delivery causes in significant segments of both the military and civilian markets.

Professor Celia Morgan, who is leading the current study and led Awakn's recent successful Phase IIb trial — which was hailed as one of the most important moments in psychedelics in 2022 by several media outlets — commented that “this study is really exciting for the future of ketamine-assisted therapy in the treatment of alcohol problems."

“If we find a signal that this new formulation may work in alcohol use disorder, then this could open up ketamine-assisted therapy to a much wider range of clinicians, practitioners, and patients. It may also be useful in rolling out this therapy in other indications."

“Our previous evidence has shown that ketamine-assisted therapy works in alcohol use disorder, but this is somewhat limited due to the need to give the ketamine intravenously. This may then herald the advent of a much more widely available new treatment for people struggling with alcohol problems who are not currently being served by existing treatments.'"

 Awakn CEO Anthony Tennyson concurs: “This is an exciting development for Awakn, which we believe will strengthen our innovative pipeline of therapeutics and corresponding IP."

“Critically, it also has the potential to improve treatment options and experiences for so many people suffering from Alcohol Use Disorder; with so few effective options available to them, there has never been a greater need.’"

Why now?

Awakn seemed to be in a strong financial position before the announcement of this new technology. The company delivered revenue of CA$430,504 via its clinics for the three months ending October 31, 2022, compared with nil in the prior year. This represents a 27% increase over the previous quarter, primarily driven by the provision of ketamine-assisted therapies at the London, Bristol, and Oslo Awakn clinics. Additionally:

• As of October 31, 2022, the company had CA$1,132,590 in cash
• It announced proceeds of CA$3,056,697 from the closing of a two-tranche private placement of 5,557,630 units at 55 cents per unit (including shares for debt)
• It secured CA$775,000 in working capital to expand Nordic commercial operations

The company also announced the grant of stock options to purchase 1.1 million common shares exercisable at CA$0.55 per share, of which one million options vest one-third immediately and one-third on the first and second anniversary and expire five years from the date of grant. The remaining 100,000 options fully vest on grant, and expire one year from the date of grant.

Total TSX short positions on the company grew from 9,483 in the December 21, 2022, report to 12,318 in the January 9, 2023 report, increasing by 2,835.

In a December posting, Andrew Partheniou from Stifel rated the company a Speculative Buy and noted that he considered Awakn undervalued.

Ownership and  Share Structure

Awakn’s management owns 18.82% of the company’s 32,476,187 common shares.  Awakn also has 9,049,240 warrants, 2,971,746 stock options, and 35,172 DSUs outstanding for a fully diluted of 44,532,345.

OrbiMed Advisors LLC files as an insider, with a 7.40% equity stake (2,403,550 regular shares) and 989,583 warrants exercisable at prices of CA$1.80 or 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.

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