Biotech Private Placement Oversubscribes at Twice Share Price

Source: Streetwise Reports 07/12/2023

A non-brokered private placement for a company zeroing in on addiction treatments is being oversubscribed at more than twice its current share price.

A non-brokered private placement for Awakn Life Sciences Corp. (AWKN:NEO; AWKNF:OTCQB), a company pivoting from healthcare services to focusing solely on the research and development of addiction treatments, is being oversubscribed at more than twice the company's current share price.

The offering grew from CA$3 million to CA$4 million at a price of CA$0.46 per unit. The stock was at CA$0.20 on Wednesday.

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" with high net worths and ultra-high net worths.

Awakn is one of the companies best positioned to capitalize on the "robust potential of psychedelics in alcohol use disorder (AUD)," an estimated $20 billion-plus global market, H.C. Wainwright & Co. analyst Patrick Trucchio wrote in a research note.

"With a potential addressable patient population in Western markets that exceeds 30 million people and with 10% or less of these patients in active treatment, the unmet medical need and opportunity for innovative approaches to treatment is very high," Trucchio wrote. "As such, we believe the potential for psychedelics with therapy to ameliorate AUD could represent a significant opportunity for drug sponsors, which is highly underappreciated by investors."

Stifel analyst Andrew Partheniou noted in a December research note that Awakn was in "a significantly advantageous position" because of government funding it is receiving for a trial of one of its drugs. He rated the stock a Speculative Buy with a CA$1.75 per share target price.

The alcohol-induced death rate jumped by more than one-quarter between 2019 and 2020 at the start of the pandemic after steadily increasing for decades, the U.S. Centers for Disease Control and Prevention said.

"What's a word bigger than crisis?" Marvin Ventrell, chief executive officer of the National Association of Addiction Treatment Providers, told CNN. "What was already a crisis, has exploded."

On June 9, Awakn announced it would focus on research and license 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.

"The key message here is we're exiting healthcare services to focus solely on the research and development of therapeutics to effectively treat addiction with a near-term focus on AUD. This reduces our burn and extends our runway," Tennyson said.

As part of the shift, the company has sold its subsidiary that owns and operates its London healthcare clinic to a joint venture. 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, the company aims to address the growing global concern surrounding substance abuse and addiction-related disorders and provide effective and evidence-based treatment options.

The Catalyst: Targeting Alcohol Use Disorder

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 start 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 (S)-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 docuseries "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.

Giving Investors What They Want

Tennyson said the company made this move because the expectations of biotech and healthcare services investors are different — biotech investors tend to prefer capital appreciation whereas healthcare service investors tend prefer revenue and margin.

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$7.8 million with about 35 million shares outstanding. It trades in a 52-week range of CA$0.18 and CA$0.98.

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Important Disclosures:

1. Awakn Life Science Corp. has a consulting relationship with an affiliate of Streetwise Reports and pays a monthly 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.
4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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( Companies Mentioned: AWKN:NEO; AWKNF:OTCQB, )

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