source: Andrew Parthenio 07/13/2022
A healthcare company with catalysts coming up wants to capture a share of the C$6 billion alcohol addiction treatment market through drug-assisted psychotherapy therapies.
The dope space in the biotech industry has been tough, with stocks not far from all-time lows amid recent risk sentiment.
Andrew Partheno, a Toronto-based Stifel GMP analyst, sees this environment as favorable “for long-term investors who can choose among the best candidates at a risk-free entry point.”
“The company has successfully completed the world’s first Phase 2A with MDMA for AUD. The result can be a cure for up to 10 years ahead of general competition, providing more attractive long-term economics.”
– Stifel GMP Analyst Andrew Partheniou
“We highlight AWKN as a pure drug company focused on addiction treatment with a world-renowned management team including Professor David Natt, a differentiated clinic strategy that leverages a ketamine treatment protocol backed by the only clinical trials for alcohol use disorder (KARE) and a risk-free drug development pathway with The lead MDMA candidate for alcohol use disorder (AUD) is currently in Phase 2,” Partheniou wrote in a research report on stocks dated March 31, 2022 beginning coverage Awakn Life Sciences Corp. (AWKN: NEO; AWKNF: OTCQB).
“At an enterprise value of less than C$50 million, we believe the equity offers an attractive risk-reward profile with investors receiving its KARE licensing strategy, on-label capabilities for KARE as well as free second generation candidates,” he added.
Partheno bases his view on Awakn on a “world-renowned management team” that includes Professor Celia Morgan and Professor Ben Sesa, who both completed the world’s first trial of ketamine and MDMA clinical trials for AUD. Meanwhile, Nott is the global expert on substance addiction, leading the second generation drug pipeline at AWKN, while Professor Sean McNulty brings “a wealth of excellent experience to guide these drug therapies through marketing.”
Part two of Partheno’s investment thesis includes Awakn leveraging its KARE protocol to address a “Can$5-6.5 billion market opportunity”. He wrote that Awakn’s evidence-based, ketamine-supported psychotherapy “distinguishes itself from competing clinics” and can “increase adoption rates.”
“Investors also get free optional access to KARE international licensing opportunities and potential insurance reimbursement after obtaining a successful market license,” Partheno wrote.
He noted that the company is taking steps to eliminate the risks presented by its offerings and that CEO Anthony Tennyson has a “track record of mitigating risks”.
“The company has successfully completed the world’s first Phase 2A with MDMA for AUD. The result may be a cure up to 10 years ahead of general competition, providing more attractive economics in the long run,” Partheno wrote.
Partheniou also sees a revaluation based on the market license for its KARE protocol as well as from “the KARE license to expand more quickly and in an asset-light manner.”
Here are Partheniou’s upcoming major catalysts for Awakn:
- 2022: KARE licensing initiatives announced in North America, UK and Europe
- Q3/22: KARE enters stage 3 in the UK
- Q4/22: MDMA entry for AUD Stage 2b in the UK
- Q1/23: Select a leading second generation candidate property with strong IP capabilities
Partheno arrived at his valuation using a “total parts analysis with a multiple-sales approach to the AWKN Clinic business, applying a 1.5 times multiplier to our fiscal year 24 revenue of C$22 million. This translates to a contribution of approximately 15% to our company’s consolidated valuation, with MDMA calculated.” against the Australian dollar in a 10-year discounted cash flow model representing the balance.”
Stifel GMP initiated coverage of Awakn with a speculative buy rating and $8 target price. Awakn shares are currently trading at around $0.86.
1) Brian Sylvester wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. They or their family members own the securities of the following companies mentioned in the article: None. Their salaries or their family members are paid by the following companies mentioned in this article: None.
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Stifel GMP Disclosures, AWAKN Life Sciences Corp. March 31, 2022
I, Andrew Partheniou, certify that the opinions expressed in this research report accurately reflect my personal opinions on the subject of securities or issuers; I, Andrew Partheno, certify that no part of my salary has been, or will be, directly or indirectly related to the specific recommendations or opinions contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at www.stifel.com/institutional/ImportandDisclosures.
Awakn Life Sciences Corp. is a customer of Stifel Canada or an affiliate company or has been a customer of Stifel Canada or an affiliate company within the past 12 months. Awakn Life Sciences Corp. is supplied. with investment banking services from Stifel Canada or an Affiliate or have been provided with investment banking services by Stifel Canada or an Affiliate within the past 12 months. Stifel Canada or one of its affiliates has received compensation for investment banking services from Awakn Life Sciences Corp. In the past 12 months. Stifel Canada or one of its affiliates expects to receive or intends to receive compensation for investment banking services from Awakn Life Sciences Corp. In the next three months. The equity research analyst(s) responsible for preparing this report receive compensation based on various factors, including Stifel’s total revenue, which includes investment banking revenue.
The information herein has been prepared from sources believed to be reliable but is not guaranteed by us and is not a complete summary or statement of all available data, nor is it an offer to buy or sell any securities referred to here. Opinions expressed are as of the date of this publication and are subject to change without notice. These opinions do not constitute a personal recommendation and do not take into account specific investment objectives, financial situation or the needs of individual investors. Employees of Stifel or its affiliates may, on occasion, issue written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within.
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