Awakn Navigates the Tough Market for Investment Capital
British psychiatrist Ben Sessa believes fervently in psychedelic medicines. They are “likely to change the whole paradigm of psychiatry,” says Sessa, the head of psychedelic medicine of a startup company called Awakn Life Sciences. Psychedelics with therapy, he says, will alleviate suffering from addictions, depression and anxiety by targeting the trauma underneath.
Session’s passion for psychedelics is evident. His 2012 book, The Psychedelic Renaissance, was ahead of its time. His rousing speech at the Horizons: Perspectives on Psychedelics conference this fall was met with enthusiastic applause.
But the psychedelics business does not lack passion. What it lacks is capital. Investors have turned against psychedelic startups, with almost all stocks in the market losing value over the last 18 months. With a stock price that has fallen by 90 percent since its initial public offering last year, Awakn is a case in point. It’s a sobering reminder that until these companies attract more investment, the so-called psychedelic renaissance will be unable to deliver on its promise.
Psychedelic medicines “are unproven in the established health care system,” explains venture capitalist Matias Serebrinsky, co-founder of PsyMed Ventures. It’s hard, he says, for investors to wrap their heads around how and why these therapies work, how they will be distributed and how they will mesh with today’s health-care infrastructure. “This is extremely novel,” Serebrinsky says.
“There’s a long path to drug development,” says Lindsay Hoover, managing partner of the JLS Fund, which holds shares of Awakn. “This space isn’t for the armchair investor at home.”
Like most startups, Awakn has a good story to tell. The London-based company is focusing on ketamine-assisted therapy for alcohol use disorder, buoyed by the results of a clinical trial that delivered impressive results. It operates ketamine clinics in the UK and Norway, and it is expanding into the U.S. through partnerships.
Awakn has also attracted world-renowned scientists, including David Nutt, the founder of Drug Science, a popular podcast and website; Celia Morgan, a professor of psychopharmacology who led the company’s ketamine trial; and Sessa, a child and adolescent psychiatrist who according to his bio, is one of the very few people to receive MDMA, LSD, DMT, ketamine and psilocybin in a legal research setting.
The company has big ambitions. In an interview at the firm’s London clinic, Anthony Tennyson, Awakn’s chief executive, told Lucid News: “Our purpose is to democratize psychedelics.”
Awakn, he says, intends to demonstrate to patients, regulators and, most importantly, the institutions that pay for health care – the public-health system in the UK and insurers in the U.S. – that its novel treatments work as well or better than existing ones.
First, though, Tennyson will have to win over skeptical investors. When Awakn went public in June, 2021, on the NEO exchange in Canada, “psychedelics companies were performing well in the capital markets,” Tennyson says. That’s no longer so, to put it mildly. Shares of Awakn that once traded for as much as $3.36 per share recently changed hands at $0.30, giving the company a market capitalization of less than $10 million Canadian (CAD), or about $7.5 million U.S.
Awakn’s financial status appears precarious. The company reported net losses of more than $5 million CAD during the first half of this year and ended the second quarter holding less than $500,000 CAD in cash. It raised $1.8 million CAD since then, borrowed $750,000 CAD to expand its Nordic operations and generated modest revenues from its clinics, but it will need more financing soon. Awakn declined to say how much cash it has on hand; it will report earnings this month.
In a positive sign, a recent round of fundraising from private investors valued the company at “considerably above” its market price, according to Gordo Whitaker, Awakn’s chief marketing officer. “We have good investors who are supporting us,” he says.
A Market Ripe for Disruption
Drug and alcohol addiction contribute to an estimated 11.8 million deaths worldwide, more than all cancers.. “It’s a big bloody problem,” says Tennyson. It’s also a big business. Globally, analysts at Transparency Market Research estimate that the market for treating addictions generated more than $10 billion in revenues last year. The U.S. alone has about 14,000 drug and alcohol treatment centers.
By most accounts–reliable data is scarce–about half of patients relapse.
“The paucity of efficacious addiction treatments signals there is a strong need for innovation in the addiction treatment industry,” says Andrew Partheniou, an investment analyst with Stifel Nicolaus Canada, in a proprietary report on Awakn.
This explains why Awakn is “absolutely focused on treating addiction,” Tennyson says, beginning with ketamine-assisted therapy for alcohol use disorder.
Ketamine has been used widely and legally for decades as an anesthetic. It subsequently garnered attention as an off-label fast-acting antidepressant, and more recently has emerged as a way to reduce problematic alcohol and drug use. In a 2018 essay published in Neuropharmacology, Celia Morgan and her co-authors wrote that “ketamine has been shown to effectively prolong abstinence from alcohol and heroin in detoxified alcoholics and heroin dependent individuals, respectively.”
Morgan subsequently led the world’s first randomly controlled clinical trial of ketamine-assisted therapy for the treatment of alcohol-use disorder. It was a small trial, with 96 patients, but the researchers found that three doses of ketamine combined with therapy significantly increased abstinence rates for six months following the treatment. The study “paves the way for a paradigm shift in how alcohol use disorder is treated,” Morgan said then.
After those results were published, a UK government agency that sponsors medical research approved $2.5 million in grant funding to cover 66 percent of Awakn’s Phase III trial of ketamine-assisted therapy for alcohol abuse, which will include 280 patients. If the results are positive, the company will seek funding for the therapy from the UK’s National Health Service. Awakn also plans to begin securing FDA approval for the program next year.
Until the treatment is approved, ketamine for alcoholism isn’t covered by insurance or government-paid health care. But doctors are free to prescribe ketamine off-label for all kinds of ailments, including addictions.
As a consequence, patients who can afford it can seek ketamine treatment for alcoholism at Awakn’s three clinics in the UK and Norway. The company will also offer the treatment through partnerships with about a dozen clinics in the U.S. and Canada operated by ketamine companies Revitalist, Wellbeings and Nushama.
Nushama operates a luxurious wellness center in midtown Manhattan that treats depression, anxiety, mood disorders and PTSD. By licensing Awakn’s therapy manual and protocol, Nushama will soon be able to treat people with alcohol dependency as well.
“This is about understanding alcoholism as a manifestation of trauma,” says Jay Godfrey, a former fashion designer who is a co-founder of Nushama. A ketamine experience makes possible “a much deeper dive into why you are reaching into that glass of wine or that margarita.”
Nushama plans to charge $12,500 for three ketamine experiences and seven sessions of talk therapy. The costs of conventional drug and alcohol treatment vary widely but an intensive program of outpatient treatment costs from $15,000 to $19,000 a month, according to the National Center for Drug Abuse Statistics. Residential programs cost more.
Back in the UK, Awakn is building a pipeline of treatments that go beyond its flagship offering of ketamine for alcohol abuse. It is planning a phase II trial of MDMA for alcohol use disorder, following up on a small study led by Sessa that established the safety and tolerability of MDMA. It is exploring the potential of ketamine to treat behavioral addictions such as compulsive gambling or consumption of pornography.
Awakn is also developing its own unique compounds, a project led by David Nutt, who notes via email that he joined the company because it is doing “research on new forms of MDMA and Ketamine as well as offering clinical treatment with ketamine – so they cover both my interests – research and clinical treatment.”
Interestingly, Awakn last fall announced a partnership with a NASDAQ-traded pharmaceutical company called Catalent to see whether MDMA can be delivered in a freeze-dried form that dissolves almost instantly in the mouth, using a proprietary Catlant technology called Zydis. Catalent recently reached a similar agreement with a startup called Lusaris Therapeutics, which is developing a fast-acting form of 5-MeO-DMT. Lusaris launched in November with $60 million in funding –a sign that selected psychedelics companies remain able to attract investment capital.
For now, Awakn has no choice but to work with the traditional diagnoses that are used by regulators and insurers. But Ben Sessa believes that psychedelic-assisted therapies will eventually blow up the Diagnostic and Statistical Manual of mental disorders, which is usually called the DSM.
“These diagnoses themselves are somewhat arbitrary,” Sessa tells Lucid News, in an interview before his talk at the Horizons conference in October. Depression, anxiety and addiction are usually symptoms of deeper problems. He likes to tell patients: “I don’t care what you call it. You’re not well. You’re not happy. It’s about your trauma. It’s about your pain.”
Psychedelic treatments are effective, he says, because they target the causes of distress, helping people to reimagine who they are. “Psychedelic psychotherapy will probably work for every condition in psychiatry,” says Sessa, with the exceptions of a few ailments, like bipolar disorder or schizophrenia.
What’s more, clinical trials have shown that a variety of psychedelic drugs, when accompanied by therapy, can be effective. “Whether it is MDMA, ketamine or psilocybin, they are more similar than they are different,” Sessa says. “They are all better than non-drug psychotherapy.”
If Sessa is right, patients will be able to choose from a menu of psychedelics for therapy. But the availability of multiple drugs complicates the path forward for startups like Awakn that want to persuade healthcare funders that their treatments are superior to those offered by competitors. Psychedelic startup B.More, for example, wants to treat alcoholism with psilocybin, while Journey CoLab, another startup, is developing mescaline for alcohol abuse.
“How that would work, financially, I’m not sure,” Sessa says.
In the short run, investors will have to decide whether to bet on risky psychedelic stocks and, if so, which companies to favor. In the private and public markets, investors along with nonprofit donors will shape the future of psychedelics, for better or worse.
Tennyson says he has been speaking to xbanks about getting Awakn uplisted on the NASDAQ, in an effort to give the company more visibility with U.S. investors. This often involves meeting quantitative asset and income requirements. “It’s tough having your primary listing on a Canadian exchange,” he says.
Venture capitalists remain confident that companies with strong prospects will attract capital, so long as their valuations reflect the sector’s inherent risks.
“The best companies will get funded,” says Matias Serebrinksy. “I strongly believe that.”
Lindsay Hoover agrees. “It’s the wheat from the chaff story,” says Hoover. “It always is.”