For many investors, investing in the biotech sector means many years of research and development, mounting costs tied to R&D and many years away from generating any significant revenue due to long clinical trials and a long road to FDA approvals. However today we’ll be going over one biotech stock which many of the concerns noted above do not apply and is actually in the early innings of generating a lot of revenue!
The psychedelic sector has endured quite the shake up with many sitting at new lows which is largely due to the meltdown the major markets had over the last few weeks, choosing the right stocks for the recovery will be essential. And just because the broader market has experienced some weakness as of late, does not affect the mounting research being compiled into psychedelics and the benefits it has.
Many are familiar with the more traditional forms of psychedelics, ie: Psilocybin and LSD, although now, new and ongoing research has recently shown that Ketamine can greatly aid those who suffer with forms of addiction such as Alcohol Use Disorder.
Awakn Life Sciences (NEO: AWKN) (OTCQB: AWKNF) a biotech company based in the UK with offices in Toronto is developing and commercialising more effective treatments for Addiction, with a near-term focus on Alcohol Use Disorder.
Key activities:
Development: Developing effective psychedelic treatments for addiction with a near-term focus on Alcohol Use Disorder, a condition that affects 400m globally.
Commercialization: Generating revenue through a limited number of wholly owned clinics in Europe and through licencing partnerships into the US addiction treatment clinics industry.
Key Highlights:
Significant market opportunity: 20% of adults global suffer with a substance addiction, current treatments have limited success / efficacy, with the US addiction treatment industry alone being valued at US$40 billion per annum
Highly experienced team: Industry leading team with deep biotech, research, and capital markets experience from Gilead, Pfizer, Charles River, Imperial College London, Merrill’s, and Accenture Strategy. Awakn’s team is built for the future but successfully executing today.
Data support science: Multi layered IP strategy with three compounds (ketamine, MDMA, and newly developed compounds) targeting several addictions (including alcohol and gambling) giving the Awakn multiple ‘shots on goal’. Key IP assets include a completed Phase II trial for AUD with efficacy proven by delivering 86% abstinence in the 6 months post treatment (162 out of 180 days) compared to 2% abstinence prior to trial.
Financials: Significant potential future value through Biotech R&D activity based on the maturity of the research (phase IIa and Phase IIab trials complete), market opportunity (ref above) and underperforming nature of current treatment options. Revenue generating today through Awakn Clinics with a US licencing partnership revenue stream due to come online late 2022 / early 2023. Publicly traded but relatively undervalued with potential for a future NASDAQ up list.
A Biotech’s Path to Revenue
Company’s conducting research and development within the biotech space is known to be extremely cash intensive before turning a profit, however companies that aim to generate free cash flow which can then be used to further fund its research and development costs are the ones investors should be paying attention too. In March, Awakn Life Sciences (NEO: AWKN) (OTCQB: AWKNF) opened its most recent Ketamine-Assisted Therapy clinic located in London, England. This officially marks AWKN’s third clinic that is fully operational and are already receiving patients.
AWKN is expecting to generate approximately £3 Million or USD $3.5 Million per clinic with an expected 15-20 clinics. Using the estimates above, this means AWKN is set to generate USD ~ $9 - $10.5 Million per year just on the three clinics they currently have, and up to $USD 70 Million in revenue once all 20 clinics are fully operational!
AWAKN’s other near-term revenue stream is a series of licensing partnerships the company is planning start in late 2022 / early 2023, where the company will ‘out-licence’ its proprietary ketamine treatments for AUD to the US addiction treatment clinics industry, noting that there are 10,000 – 15,000 such treatment clinics in the US.
Since the global sell off in the capital markets since January, many companies in the psychedelic sector have hit new lows, although shares of AWKN have seen a lot of strength recently with a strong bounce from the $1.20’s on increased volume as shown below. AWKN has a very tightly held share structure, whereby insiders and management own 30% of the 30M shares currently outstanding.
Awakn Life Sciences will also be presenting at several conferences this month which includes; the Nordic Psychedelic Science Conference in Oslo, Norway this May 19th – 20th, Global Investment Conference which runs through May 23rd – 26th and on May 27th – 29th AWKN will be at Toronto’s From Research to Reality: Global Summit on Psychedelic-Assisted Therapies and Medicine Conference.
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