Transitioning Biotech Co. Upsizes Private Placement

Following an announcement that it is shifting focus from healthcare services to research and development activities, Awakn Life Sciences Corp. (AWKN:NEO; AWKNF:OTCQB) has closed a second tranche and upsized a previously announced non-brokered private placement.

Over the two tranches, the company has issued 4.3 million units for gross proceeds of nearly CA$2 million at a price of CA$0.46 per unit. It has also decided to upsize the offering from up to CA$3 million to up to CA$4 million.

The stock was at CA$0.22 on Thursday.

Co-founder and Chief Executive Officer Anthony Tennyson told Streetwise Reports that the funding was "institutional money" that came from "medium- to long-term, value-based investors."

Each unit of the offering comprises one common share and three-quarters of one whole common share purchase warrant, which entitles the holder to acquire one common share at CA$0.63 per share for five years.

Proceeds from the offering will be used to finance the company's general working capital as it transitions to R&D activities for addiction-related therapies.

"I think the key the key message here is we're exiting the clinics business, and we're significantly reducing burn," Tennyson said. "Every dollar that we raised lasts longer. We are laser-focused now on developing therapeutics to treat addiction. That's what we do."

Earlier this month, Awakn announced it was pivoting to research and licensing its valuable intellectual property in the field. By redirecting its resources and expertise toward research and development (R&D) and intellectual property (IP) licensing, Awakn aims to enhance its position as a leader in developing innovative solutions for addiction treatment.

As part of the shift, the company has entered a non-binding term sheet to grant license for components of its healthcare services and IP in the United Kingdom to a consortium of a private investment company and a prominent third-sector organization specializing in addiction and mental health treatment. The consortium will pay Awakn an upfront and share revenue with the company.

The company said it has also started an evaluation of its healthcare clinics unit in Norway and is looking for potential buyers, and it will restructure its healthcare clinics in the U.K.

Awakn is at the forefront of developing innovative solutions for the treatment of addiction using psychedelics like ketamine and MDMA. With a strong focus on research and development, Awakn aims to address the growing global concern surrounding substance abuse and addiction-related disorders and provide effective and evidence-based treatment options.

Technical analyst Clive Maund in March rated Awakn Life Sciences a Strong Buy, saying at the time that it was at a good entry point. Last fall, he wrote that Awakn had "become a more attractive prospect over time."

The Catalysts: Giving Investors What They Want

Tennyson said the company made the move in part because of the different goals of investors in the two sectors of healthcare services and research and development.

"We were hitting challenges with our current investor base and other investors who we spoke to," he said.

According to Tennyson, "biotech investors want capital upside" and the clinics were "capex intensive."

Awakn said making significant advancements in its clinical and preclinical-stage pipelines is now its primary focus.

AWKN-P001 is its lead clinical development initiative at Phase 3. The drug specifically targets severe alcohol use disorder and has received substantial funding support from the U.K. Department of Health.

The study is anticipated to commence in the second half of 2023. The government funding for the trial covers 66% of its cost, and the U.K. National Health Service will oversee the trial across 10 different locations. Awakn's financial contribution toward the study is estimated to be around £800,000. 

"We achieved 86% abstinence in the six months post treatment, which is three and a half times better than the current standard of care," Tennyson said.

Awakn is also working with a European pharmaceutical company to repurpose ketamine into an oral film for sublingual delivery and looking at MDMA as a mental health treatment, he said.

Addiction Treatment Market Growing

Medical use of psychedelics has been making waves over the past few years, with Awakn even being featured in popular streaming platform Netflix's docu-series "How to Change Your Mind."

The need for the practical uses for these drugs has taken off as the global rate of alcohol use disorder has been steadily growing.

Colombia University's Department of Psychiatry reported that "after increasing approximately 2.2% per year over the previous two decades, alcohol-related deaths spiked a whopping 25.5% between 2019 to 2020, totaling nearly 100,000 deaths. Meanwhile, alcohol-associated liver disease deaths increased by 22.4%, with alcohol-related traffic deaths increasing by 14%."

"The global addiction treatment market is expected to attain a market value of US$12 billion by the end of 2030," Addiction Treatment Market reported. 

"The global substance abuse treatment market is expected to grow at a compound annual growth rate of 9.05% from 2023 to 2030 to reach USD 20.51 billion by 2030," according to Grand View Research. 

Continued Revenue Stream From Healthcare Services IP

As part of the pivot to research and development, Awakn is licensing its healthcare services intellectual property for royalty streams.

It has entered a non-binding term sheet to grant an exclusive license for specific components of its healthcare services intellectual property solely within the United Kingdom.

Additionally, it will provide a non-exclusive license for Awakn Kare, its proprietary offering, also within the U.K. The licensing deal involves a consortium comprising a private U.K. investment company and a prominent third-sector organization specializing in addiction and mental health treatment. As per the terms, the consortium will pay an upfront fee and agree to share revenue with Awakn.

In addition, Awakn has begun evaluating its healthcare clinics business unit in Norway, known as Awakn Oslo AS. The unit achieved record-breaking monthly revenue in May 2023. Awakn aims to identify potential buyers who may be interested in acquiring Awakn Oslo AS.

Finally, Awakn Life Sciences Corp. has decided to restructure its healthcare clinics business unit in the United Kingdom. As part of this process, it is anticipated that Awakn's entities in the U.K. will undergo either administration or liquidation.

The company held is annual general and special meeting of shareholders on June 27 during which the number of its directors was fixed at five, and Anthony Tennyson, Stephen Page, George Scorsis, John Papastergiou, and Paul Carter were elected to the positions. Shareholders also adopted MNP LLP as the company's auditor and adopted the company's long-term incentive plan. 

Ownership and Share Structure

According to the company, 10.73% of Awakn's stock is held by management and strategic investors.

CEO Anthony Tennyson has 4.72%, with 1.54 million shares.  Co-founder and chair George Scorsis owns 3.23%, with 1.13 million, and Non-Executive Director Steve Page has 0.19%, with 0.07 million.

According to Reuters, 7.4% is with institutional investors. The rest is in retail.

Awakn has a market cap of CA$8.5 million with about 35 million shares outstanding. It trades in a 52-week range of CA$0.20 and CA$0.98.

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Important Disclosures:

1. Awakn Life Science Corp. is an affiliate of and has a consulting relationship with Streetwise Reports and has paid a consulting fee between US$8,000 and US$20,000. 
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Awakn Life Sciences Corp.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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