Awakn Life Sciences Corp. (AWKN:NEO; AWKNF:OTCQB) is a biotechnology company that uses psychedelics in combination with psychotherapy to treat things like Alcohol Use Disorder (AUD) and depression. The company is already generating revenue from a small number of psychedelic treatment clinics and is considering licensing its treatments to third-party clinics.
Maxim Equity Research Analyst Jason McCarthy wrote that addiction is a significant public health challenge with substance addiction impacting around 15-20% of the population in the U.S. and Europe, and "driving a $17.5-billion ($17.5B) treatment industry, which is rapidly growing and is expected to reach $31B by 2027. AUD makes up 30% of this market and impacts 5% of the global population."
McCarthy explained that “current therapies for alcohol use disorder have limited effectiveness with only a small portion of patients with AUD ever seeking treatment (~15%).”
Awakn's P2a Bristol Imperial MDMA in Alcoholism (BIMA) study showed a significant decrease in the alcohol intake of its participants, noted McCarthy.
In nine months, only 21% of those in the P2a study were still drinking over the doctor’s recommended amount (14 units per week), compared with 75% of the people in the observational study. Overall, patients lowered their alcohol intake to around 18.7 units per week after nine months post-detox, down from 130.6 units per week before treatment.
With ketamine-assisted therapy, Awakn has licensed the only P2-validated protocol for AUD, which gives the company an advantage versus other companies providing similar therapeutics.
“Considering that private addiction treatment comes with a 70%-80% fail rate and treatment can cost north of $30K, the opportunity for Awakn to improve this model is significant,” McCarthy wrote.
Awakn is currently on a path to developing and fortifying its infrastructure. The company's goal is to open 20 clinics over the next few years, with each clinic generating £1.75 million (US$2.1M) to £3M (US$3.6M) in revenue, depending on clinic size. Awakn also sees the possibility of licensing its protocols to third-party clinics, most of which would be in the U.S.
McCarthy pointed out that “Awakn is unique in psychedelics, integrating clinics with development of both traditional psychedelics and NCEs, and creating synergies for both drug development and commercial launch. The importance of having both, in our view, is not fully valued at the current market cap.”
Awakn's market cap was CA$23.15M as of the close on July 12.
McCarthy reports that in F1Q22, Awakn had a net loss of CA$1.2M.
In June 2021, Awakn listed on the NEO exchange after a reverse-takeover (RTO) of a Canadian company. It later listed on America's OTCQB in August. In association with the RTO, Awakn raised CA$8.3M in a private placement.
New York City-based Maxim Group gave Awakn a Buy rating with a $4 per share target price. Awakn shares closed at CA$0.86 on July 12.
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Disclosures for Maxim Group, AWAKN Life Sciences Corp., September 1, 2022
I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
I, Michael Okunewitch, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.
Maxim Group expects to receive or intends to seek compensation for investment banking services from Awakn Life Sciences Corp. in the next 3 months.
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