Evoke Pharma, Inc.
Q4 2020 Earnings Call Transcript

Published: 11 Mar 2021

[Operator:]

Good afternoon, and welcome to Evoke Pharma’s Fourth Quarter and Full-year 2020 Earnings Conference Call and Audio Webcast. With me today are Dave Gonyer, Evoke’s Chief Executive Officer; and Matt D’Onofrio, Chief Business Officer; as well as Chris Quesenberry from Eversana as Gimoti Chief Commercial Officer. Earlier today, Evoke issued a press release announcing financial results for the fourth quarter and year-end December 31, 2020. We encourage everyone to read today’s press release as well as Evoke’s annual report on Form 10-K, which is filed with the SEC. The company’s 10-K report and press release are also available on Evoke’s website at www.evokepharma.com. In addition, this conference call is being webcast through the company’s website and will be archived there for future reference. Please note that certain of the information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, Evoke’s management will be making Forward-Looking Statements.

[Dave Gonyer:]

Thank you, Christine, and thank you all for joining us this afternoon for Evoke Pharma’s fourth quarter and full-year 2020 earnings conference call. Before we begin, I would like to first recognize and thank all the critical workers who have helped to ensure the public safety and health during this unprecedented times caused by the COVID-19 pandemic. Despite the challenges we have all experienced since about the same time last year brought on by the pandemic, we are pleased to be with you today to share details on what was a transformative year for Evoke Pharma. It was a year of execution for Evoke despite the headwinds from the pandemic. We secured FDA approval for Gimoti in June, gained Orange Book listing for two patents and then filed for several more, maintain appropriate finances and commercially launched Gimoti in the U.S. While we reported our fourth quarter effective revenues today, we are pleased with the meaningful growth that we are seeing in 2021. We are excited with the positive response and receptivity from our targeted healthcare providers through Gimoti’s launch and the benefit it provides to patients. And as Chris will discuss in further detail, we are hearing encouraging feedback by existing and new prescribing physicians and patients. We are proud to have successfully executed on our business strategy, and in achieving our most critical milestones of 2020, FDA approval of Gimoti and the subsequent commercial launch in the U.S. through our partnership with Eversana. With the launch of Gimoti, we are now a commercial pharma company and are providing an important new treatment option for patients living with diabetic gastroparesis. Patients in this underserved market are seeking options to improve their quality of life and as a result of many hours of dedication and hard work by our team, consultants and the clinical investigators supporting us along the way, patients now have Gimoti as a new treatment option.

[Chris Quesenberry:]

Thank you, Dave. I would like to begin by echoing the value that Gimoti represents to healthcare providers and their patients struggling with the symptoms of acute and recurrent diabetic gastroparesis. This disease does not take a holiday. It does not go away, and there is no cure. Importantly, these patients do not have enough options to control their symptoms and many must alter their daily life to cope with its impact. It is specifically for these patients and what they endure so bravely that we are working hard to bring Gimoti to them. I’m proud of the partnership forage between Evoke and Eversana. Together, we have laid out a disciplined commercial plan to realize the potential for Gimoti, and we are executing that plan in a deliberate and stepwise manner. The foundation of our commercial efforts is built on our vision for denote to be the preferred treatment to improve the health and daily life of patients struggling with diabetic gastroparesis. We have built a strong value proposition and clear messaging for our target audiences and develop a compelling promotional campaign to communicate to providers and patients alike. To support patients and overcome access hurdles that are typical for any new launch brand, we developed a patient support hub and co-pay program where patients and the providers can enroll in a program called Evoke Assist and obtain Gimoti via our exclusive pharmacy distribution program.

[Dave Gonyer:]

Thanks, Chris. We are still very early in on our launch of Gimoti. However, physicians feedback has been very positive. Forecaster and neurologist offices will need to fully open and more patients to feel comfortable going back to doctors’ offices to help physicians give them an opportunity to try something new. Drug launches have gone slower during the pandemic and continued progress giving COVID under control is needed. Now let me turn to Matt Donofrio to review the agreement we have with Eversana in the fourth quarter and year-end 2020 financials. Matt.

[Matt D’Onofrio:]

Thanks, Dave. Once again, thank you all for joining this afternoon. Resetting the basis of the Eversana management, Eversana will receive reimbursement of its commercialization costs, pursuant to an agreed-upon budget, and are only paid back to a portion of the revenue that is recognized and received. Once those costs are covered, Eversana will receive a percentage of product profits in the mid- to high teens and Evoke pertains over 80%. And net product profits are the net sales of Gimoti, less reimbursed commercialization costs. Evoke manufacturing and Evoke administrative costs set as a fixed percentage of net sales and third-party royalty. During the term of our agreement with Eversana, they have agreed not to market, promote or sell competing products in the United States. Before I review the financials for the fourth quarter and the year-end 2020, I would like to highlight that Evoke has historically been a lean organization of five core people. We believe that we have always positions from our cash for an annual spend. That said, this past January, we completed an offering of 5.75 million shares of common stock, including underwriting selection prises option to purchase additional shares. Our gross proceeds from the offering were approximately $14.4 million before underwriting discounts and commissions and estimated operating costs. We believe this financing will extend our runway I the first quarter of 2022 without consideration potential Gimoti revenue. Now let me review our financials for the fourth quarter and full-year and 2020 results. For the fourth quarter of 2020, net sales was approximately $23,000, and the net loss was approximately 2.3 million or $0.09 per share compared to a net loss of approximately 1.4 million or $0.06 per share for the fourth quarter of 2019. For the year ended December 31, 2020, net loss was approximately 13.2 million or $0.52 per share. This compares to a net loss of approximately 7.1 million or $0.32 per share for the full-year of 2019. This increase was primarily due to the recording of a $5 million expense in June of 2020, upon achieving a technology acquisition milestone related to the FDA’s approval of Gimoti, along with costs associated with the commercial launch of Gimoti. Research and development expenses totaled 0.1 million for the fourth quarter of 2020 compared to approximately 0.6 million for the fourth quarter of 2019. For the full-year of 2020, research and development expenses were approximately 6.6 million compared to approximately 3.4 million in the year prior. This increase in 2020 was primarily due to reporting a $5 million expense in June of 2020, quantitizing a technology acquisition milestone related to the FDA’s approval of Gimoti. The milestone will be paid in June of 2021. For the fourth quarter 2020, selling, general and administrative expenses were approximately two million compared to approximately $0.8 million for the fourth quarter of 2019. For the year ended December 31, 2020, selling, general and administrative expenses were approximately 6.4 million versus approximately 3.7 million for the full-year 2019. Of the total selling, general and administrative expenses incurred during the year ended December 31, 2020, approximately two million was related to pre-commercialization and commercialization activities for Gimoti. We expect that selling, general and administrative expenses will increase in the future as we continue to progress with the commercialization of Gimoti, and we reimbursed Eversana from the net profits attained from the sales of Gimoti. Total operating expenses for the fourth quarter of 2020 were approximately 2.1 million compared to total operating expenses of approximately 1.4 million for the same period of 2019. For the year ended December 31, 2020, total operating expenses were approximately 13.1 million compared to approximately 7.2 million for the full-year 2019. As of December 31, 2020, the company’s cash and cash equivalents were approximately 8.1 million, which excludes approximately 13.1 million in net proceeds raised from our recent common stock offering in January of 2021. We expect sufficient runway to fund our operations into the first quarter of 2022. Let me turn the call back over to Dave for closing remarks.

[Dave Gonyer:]

Thank you, Matt. I would just like to close by thanking our shareholders and partners and employees for getting us over the finish line this past year. In 2021, our team will continue to build on the commercial launch of Gimoti and to increase awareness to ensure patients and the providers have access to this important product. That concludes our prepared remarks. We would now like to open the call to questions. Operator.

[Operator:]

Thank you. The first question comes from the line of Raghuram Selvaraju .

[Unidentified Analyst:]

Hi there and this is (Ph) speaking on behalf of Ram, congrats on the quarter. So I will ask a few questions and then jump back on the queue. I was wondering if you had any indication how many physicians prescribed Gimoti to-date, and what percentage of these were repeat prescribers?

[Dave Gonyer:]

Thanks, Moss. This is Dave. I’m going to turn that question over to Chris.

[Chris Quesenberry:]

Thank you for the question. So to-date, we have 108 unique prescribers and that number is growing daily. And of those, about a 30% to 40% of them are repeat prescribers.

[Unidentified Analyst:]

That is fantastic. And any indication what percentage of gastroenterologists are on this?

[Chris Quesenberry:]

Yes. The vast majority of the prescribers are gastroenterologists, which is our targeted customer. There are some primary care physicians that have prescribed, but in those cases, they are affiliated with gastroenterology practices. So nurse practitioners and P.A. as well as other internal medicine physicians.

[Unidentified Analyst:]

Okay. And the next question kind of centers around the promotional performance provided by Eversana. Do you have any metrics or indication of how well the promotion is going?

[Dave Gonyer:]

Well, we are working on that now. We have had just the fourth quarter to look at that. We are looking at the ATU in different ways that we will be able to analyze how the promotion and the rep’s effectiveness is in the physicians that we are calling on. So that is being done now.

[Unidentified Analyst:]

Understood. And just one more before I jump back in the queue. We were wondering what the gross net discount levels look like at this point and where they might be trending?

[Matt D’Onofrio:]

This is Matt. Great question. So in regards to the Q4, given the modest amount of sales, it is kind of early to give a specific number around that. However, as we have stated in the past, we haven’t been contracting with parties out there. So you can understand that, that has not had a negative effect on it thus far. We continue to take that same approach. While in the future, we may eventually engage more in the contracting aspects, and that may change, but today it hasn’t been a significant part of the overall prescriptions.

[Unidentified Analyst:]

Thanks for the color. I will jump back in the queue.

[Dave Gonyer:]

Thanks for the question.

[Operator:]

Our next question comes from the line of Yale Jen .

[Yale Jen:]

Good afternoon and thanks for taking my question. Dave, that you have mentioned at the beginning that you have seen a very positive trend this year so far, would you elaborate a little bit more?

[Dave Gonyer:]

Sure. Thanks, Yale. We have been encouraged. Remember, we launched this product in October, the end of the month, when the drug was available. And then we are into at least three major holidays in the pandemic. And we have plenty of new representatives and new territories, talking about a new product for a disease that hasn’t been discussed in at least 20 years. So starting out a little bit slower at that point. We gained significant traction after the first of the year with being able to find different ways to access physicians. And with more access, obviously, in more discussions with physicians, we have seen better trends in terms of prescriptions.

[Yale Jen:]

My next question is that it seems that the physician buy and based on your market research was quite good, but the gating factor seems to be that the patients not visiting the clinics to get treated. So I mean, what is the current or sense of what this trend might be - the patients trend might be in terms of visiting the clinic, and what other things you guys can think about to enhance that or improve that?

[Dave Gonyer:]

Yes, great question. I’m going to turn it over to Chris, Yale, for that one.

[Chris Quesenberry:]

Thank you, Yale, and you are right. I mean independent data from both Johns Hopkins as well as other sources indicate that actually through July of last year, that 41% of chronic care patients were avoiding care. And so we only believe that, that only intensified during the surge. Obviously, we have all been watching those infection rates and cases, and they seem to have dropped down as I looked at it yesterday, we are at levels that were kind of mid-October-ish. So I’m encouraged by the fact that that we will start to see offices opening back up. And with increasing access as well as increasing vaccination rates that patients will come back to the office. So I’m encouraged by that. I’m hearing reports from my sales leadership and their representatives that they are starting to see better access, but obviously, that will be a key driver for us. What I will say is, in addition to that, we are looking for ways to reach the patients directly and bring our message to them. As I mentioned on my comments earlier, we are excited about initiating our social and digital campaign, which will offer patients, education, support and ways to get access to Gimoti. So we are going to stand up some of that here in March, and we will fully realize that later in the year. And so that is going to be a key component. And then as would be normal in any launch, we are going to look for additional channels that would be open to drive revenue through.

[Matt D’Onofrio:]

And Yale this is Matt as well. Maybe I could add to this. So overall, we are seeing sales continue to improve. And Dave made comment in his prepared remarks that even just last week was our best week to-date. We are seeing that the refill rate is substantial, something in the order of 80%, 85% of persons who have come up for a first refill to actually get one. So in terms of the patient type, the physicians that are putting their patients on, they are coming back, they are seeing benefit. We are hearing stories of patients who have been on product come off, then getting symptoms to go back on again. So they are seeing that if they are not taking the product, they get ill. So there is a number of continuingly positive trends around the volumes, the experiences and the stories we are hearing from physicians in terms of even just in this most recent weeks.

[Yale Jen:]

Okay, great. That is very, very helpful. Maybe the last question here, just want to clarify. First on that, I guess, just tied up the two response you have, to, Dave, is that really translate to further improved sales, I guess, even the first two months of this quarter was probably further much further improved compared to the fourth quarter of last year. And also, when you mentioned 80 to 85 refills versus -- in the press release, there is you mentioned about 40%. Do you want to clarify that some specifics there?

[Dave Gonyer:]

What I can say, we will say, yes, every month has been better than the last. So we are gaining new prescribers, new prescriptions, and then those are being refilled. So it is growing each month.

[Matt D’Onofrio:]

And I can comment on the 40% number, that was for overall for all prescriptions. The 85% is really just for those persons that had completed a single prescription or even had the opportunity to get a new refill, and they are doing the vast majority.

[Yale Jen:]

Okay, great. Thanks a lot and keep up with the work.

[Dave Gonyer:]

Thanks Yale.

[Matt D’Onofrio:]

Thanks Yale.

[Operator:]

We have a follow-up with Ram Selvaraju .

[Unidentified Analyst:]

HI guys this is Moss on for Ram again. So we were wondering about the prior authorizations before the reimbursement of Gimoti can be authorized. And I was wondering which reinvestment agencies are imposing these requirements?

[Dave Gonyer:]

So I think what I would first say is that we have a number of different plans that have approved Gimoti. Some of them have approved it without a prior authorization. Most of them have required a prior authorization, but the majority of our dispenses to-date have been approved by either a commercial plan, a Medicare Part D plan or a TRICARE plan. We do have just a few TRICARE and a few Medicaid plans that have approved Gimoti. So it ranges from the PBMs to those plans that actually distribute on their own. So we have seen dispenses from about 25 different payers, again, ranging from commercial to Medicare to TRICARE. And those are some of the big players in the market. So Express Scripts, CVS Health, Optum would be the top 3.

[Unidentified Analyst:]

Okay, and we are wondering when Evoke may consider taking over responsibility for the entire commercial sales team?

[Dave Gonyer:]

Yes. So thanks, Moss. As it stands, we are thrilled with our current relationship with Eversana. There is so many benefits that we are able to capture from this relationship, both in terms of the infrastructure that they provide and the financial benefit in doing so. And I would also say the speed of which our capabilities are able to move, meaning it is all within one organization that we can touch base with different personnel, and they all are interacting and communicating with each other much faster than we could ever do ourselves at this stage. At this point, we don’t have a plan of taking over any sort of specific requirements or responsibilities that may change in years to come, hopefully, with an improved situation and overall sales, but for the time being, we are really happy with our relationship as it stands.

[Unidentified Analyst:]

Sounds great. And then just the final question. We were wondering if you have any indications from travel - in terms of what Gimoti net sales level would you be cash flow positive?

[Dave Gonyer:]

Thanks, Moss. We haven’t put out any guidance around breakeven analysis or otherwise. Obviously, there is a number of different components that are moving around in terms of but the number of salespeople involved and other infrastructure costs. And then, of course, just what revenues itself, which is notoriously difficult to predict as a new launch product. So at this point, we are not providing that guidance.

[Unidentified Analyst:]

Okay. Thanks so much for taking my questions.

[Matt D’Onofrio:]

Great. Thank you.

[Operator:]

Up next with another follow-up is Yale Jen.

[Yale Jen:]

Thanks for taking call. Just a housekeeping question that for this year, I mean, should we anticipate some R&D activities in terms of doing the lower dose Gimoti or you think that most of the capital will be allocated to SG&A held or to selling the products?

[Dave Gonyer:]

Yes. Well we have the post-approval commitment to work on a lower dose, and that will be begun this year for sure.

[Yale Jen:]

Okay. Great. Thanks.

[Operator:]

There are no further questions at this time. So I will now turn the call back over to Mr. Dave Gonyer for closing remarks.

[Dave Gonyer:]

Great. I will just want to say thank you, everyone, for joining today, and we look forward to providing more updates as we move forward and ahead in our journey to help patients with diabetic gastroparesis. Thank you very much.

[Operator:]

This concludes today’s conference call, and you may now disconnect.