Healthcare Co. Enters US Alcohol Addiction Treatment Market
Source: Streetwise Reports
August 17, 2022 (Investorideas.com Newswire) One analyst says this healthcare co. has the opportunity to generate attractive CAPEX-light, high margin SaaS-like recurring revenues, which investors are currently getting for free, after the biotech firm entered the US market for alcohol addiction treatment through off-label licensing deals with a network of treatment clinics.
Awakn Life Sciences Corp. (AWKN:NEO; AWKNF:OTCQB; 954:FSE), a healthcare company researching, developing, and commercializing therapeutics to treat addiction, now has a foothold in the coveted US$30 billion U.S. market for alcohol and substance addiction treatment after the U.K.-based company signed an out-licensing partnership deal with Knoxville, Tennessee-based Revitalist Lifestyle and Wellness Ltd. (CALM:CSE; RVLWF:OTCQB; 4DO:FSE).
Revitalist operates a network of 10 U.S.-based ketamine wellness clinics in six states that will now use Awakn's proprietary ketamine-assisted therapy to treat alcohol use disorder (AUD), perhaps better known as alcoholism.
Ketamine has yet to receive approval to treat alcoholism in the U.S., so the new licensing deal only applies to off-label use. Nonetheless, there is mounting evidence that ketamine allows the brain to "reset," which opens paths to more healthy behaviours.
"The current standard of care for AUD - and most addiction disorders - is insufficient, leaving many people, as well as their loved ones, suffering. Now, for the first time in the United States, these individuals are able to access this promising treatment," Revitalist CEO Kathryn Walker said.
For its part, Awakn will receive an annual licensing fee, a per-treatment share of revenue, and patient and treatment data.
Stifel GMP Analyst Anthony Partheniou published an August 15 note after the Revitalist news was made public.
"This partnership marks the first milestone achieved after the Beta launch of the licensing and partnerships program this past July, in-line with expectations and demonstrates strong execution, in our view. Going forward, we expect more partnerships to be announced," Partheniou wrote.
He noted that Awakn has signed Memorandums of Understanding with multiple North American clinics, with each potential partnership providing valuable insight that should help optimize the business model before "the full rollout expected in early 2023."
He added: "Overall, we believe this business line has the opportunity to generate attractive CAPEX-light, high margin (Software as a service) SaaS-like recurring revenues, which investors are currently getting for free, in our view, and is excluded in our forecasts."
Partheniou gave AWKN a Speculative Buy rating in a March 31, 2022 report. His 12-month target price for AWKN remains CA$8.
Meanwhile, the morning after the news broke, Technical Analyst Clive Maund, whose site has roughly 2,000 paid subscribers, wrote that Awakn "opened up CA$0.02 but then went on to close up CA$0.09 for a good percentage gain on the day, so it was worth buying it early."
Maund noted that Awakn's technical chart shows that the company is in position to break out of its downtrend and into a new bull market - and since it closed off its highs yesterday - the share price is "still at a very good entry point and thus it continues to be rated a strong buy here."
Years of data on the current standard of care for people receiving treatment for alcohol addiction suggest that three out of four patients with AUD who receive treatment (mostly prescription drugs) relapse in the 12-month period post-treatment. Awakn sees an economic opportunity in improving those outcomes.
In the U.S., there are some 14,000 substance addiction treatment facilities that generate more than US$30 billion annually - a staggering number given that the existing treatments have about a 25% success rate.
Awakn, which went public in 2020, is already generating revenue from its treatment clinics in the U.K. and Norway and will soon add licensing revenue in the U.S. to the tally.
A 2019 study published in Addiction estimated that alcohol-related conditions cost the U.K.'s National Healthcare Service about £3.5 billion pounds (US$4.2 billion) annually. Most healthcare pundits believe that number has grown considerably with the ongoing COVID-19 pandemic.
Catalysts to Come
Awakn recently applied for the Innovative Licensing and Access Pathway (ILAP) program in the U.K. for its ketamine-assisted psychotherapy, which aims to accelerate the time to market for medicines and treatments. The company should get a response sometime in October.
Inside Awakn's flagship clinic in London. Source: Awakn Life Sciences Corp.
In May, the biotech applied for a patent cooperation treaty or PCT (essentially a global patent application) for its proprietary ketamine-assisted treatment, which would give it some protection from other companies attempting to copy it. CEO Anthony Tennyson hopes to get a positive opinion on its PCT application before the end of 2022.
For its lead program - ketamine-assisted psychological therapy for AUD - Awakn is working on its regulatory authority and ethics committee review in the U.K., followed by the clinical trial phase, all with the aim of receiving marketing authorization in the U.K. by 2026.
Once that's achieved, ketamine-assisted therapy could be prescribed by a doctor and covered by healthcare insurance plans. It could also lead to other revenue streams like royalty payments and higher licensing fees.
Regulatory approval by the Food and Drug Administration will likely come sometime in 2027, but Awaken has hired U.S. consultant Veristat to map out the most efficient route to U.S. regulatory approval for its lead program.
Awakn is also working on gambling disorder treatments and is developing a 3,4-methylenedioxy-methamphetamine or MDMA-assisted program to treat AUD (which would be in addition to the ketamine treatment).
MDMA, more commonly known as ecstasy or molly, is thought to be better suited than ketamine for people who have suffered severe trauma.
Tennyson says Awakn is building an IT platform to help consistently deliver its therapies by providing training modules to clinic operators, doctors, nurses, and therapists.
It will be possible for someone with an advanced degree in psychotherapy, plus one year's experience in cognitive behavioural therapy, to be trained to deliver Awakn's program in 70 hours - a big plus given the shortage of qualified therapists.
Perhaps more importantly, the platform will potentially enable Awakn to track therapy data, which will eventually give clinics the ability to benchmark their performance - all of which would happen anonymously.
Awakn's ketamine-assisted therapy was developed and validated in a Phase II a/b trial, which delivered 86% abstinence over the first six months post-treatment versus 2% pre-trial. The results were published in January.
In the trial, 96 survey participants (35 of whom were women) with severe AUD were placed in four groups.
One was given three weekly ketamine infusions (0.8 mg/kg intravenous over 40 minutes) plus psychological therapy; the second group was given three saline infusions and psychological therapy; the third group received three ketamine doses plus an alcohol education program, and the last group was provided with three saline doses, and alcohol education.
The treatment was well tolerated, and after six months, those in the ketamine group showed a significantly greater number of days abstinent from alcohol versus those in the placebo group, with the greatest reduction coming in the ketamine plus therapy group.
Earlier this month, Awakn became the first ever public company to have a Phase 3 clinical trial in psychedelics approved to receive a U.K. government grant.
The CA$2.5-million grant will fund two-thirds of a Phase 3 clinical trial exploring the use of Awakn's ketamine-assisted therapy for AUD.
The study will cost about CA$3.75 million, with Awakn's share coming in at around CA$1.25 million.
The licensing agreement with Revitalist will bring U.S. dollars into Awakn's treasury, and that brings the company one step closer to Awakn's stated goal of up-listing to the NASDAQ, where most of the world's biggest biotech companies are traded.
The next step will be working toward FDA approval in the U.S., which should put the small-cap company on the radar of more institutional investors.
With that in mind, the company recently retained Aisling Capital Founder Dennis Purcell as a special advisor to Tennyson in order to gain a greater understanding of the U.S. market.
Awakn also hired Kevin Lorenz, who was with Alkermes Plc (ALKS:NASDAQ), as the head of Vivitrol sales for the Western U.S. Vivitrol sales in 2021 were US$343.9 million in 2021, up from $310.7 in 2020.
Other than Partheniou, two more analysts cover Awakn: H.C. Wainright & Co. Senior Healthcare Analyst Patrick Trucchio gives AWKN a Buy rating and a $10 target, while New York City-based Maxim Group Senior Managing Director Jason McCarthy gives AWKN a $4 target and a Buy rating.
Awakn has about CA$2 million cash in the treasury and will soon need to raise more.
Awakn's biggest shareholder is OrbiMed Advisors LLC. OrbiMed owns 8.93% or about 2.4 million shares.
Other institutional holders include: London-based Psych Capital; New York-based JLS Fund; investment fund Palo Santo; Florida-based Iter Investments; Grand Cayman, Cayman Islands-based Negev Capital; San Juan, Puerto Rico-based Ambria Capital; and London-based Neo Kuma Ventures.
AWKN has issued almost 27 million shares, and all but approximately 6 million shares remain tightly held. The company trades in a 52-week range of CA$0.45 and CA$3.36.
1) Brian Sylvester wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Awakn Life Sciences Corp. 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.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. 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., a company mentioned in this article.
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