Evoke Pharma, Inc.
Q4 2015 Earnings Call Transcript

Published: 11 Mar 2016

[Operator:]

Greetings and welcome to the Evoke Pharma Fourth Quarter 2015 Earnings Call. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, the conference is being recorded. I would now like to turn the conference over to your host, Lee Roth from The Ruth Group. Thank you. You may now begin.

[Lee Roth:]

Thanks Rob. Good afternoon everyone and welcome to Evoke Pharma’s fourth quarter 2015 financial results conference call and audio webcast. Joining me today from Evoke are Dave Gonyer, Chief Executive Officer; Matt D’Onofrio, Chief Business Officer, and Dr. Marilyn Carlson, Chief Medical Officer of Evoke Pharma. Earlier today, the Company issued a press release announcing its financial results for the three and 12 months ended December 31, 2015. We encourage everyone to read today’s press release as well as Evoke’s annual report on Form 10-K which was filed with the SEC earlier today. The Company’s annual report and press release are 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 management will be making forward-looking statements and that our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with the Company’s business. These forward-looking statements are qualified by the cautionary statements contained in Evoke’s press releases and SEC filings, including the aforementioned annual report on Form 10-K. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 10, 2016, and Evoke undertakes no obligation to revise or otherwise update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that said, it’s now my pleasure to turn the call over to Evoke’s Chief Executive Officer, Dave Gonyer. Dave?

[Dave Gonyer:]

Thank you, Lee. Thank you all for joining us this afternoon to discuss Evoke’s financial results for the fourth quarter of 2015, accomplishments for the full year, and an update on the Company’s outlook for 2016. Following my remarks, our Chief Business Officer, Matt D’Onofrio, will discuss Evoke’s financial results before we open the call up for questions. 2015 was a great year for Evoke, as we made significant progress in the development of EVK-001, our novel nasal delivery formulation of metoclopramide for the treatment of women who suffer from diabetic gastroparesis, and is currently in the latter stages of a Phase 3 pivotal trial. We achieved numerous objectives last year that have kept us on the path to submit an NDA in a timely manner. As of last week, we enrolled 186 of 200 subjects in our Phase 3 trial of EVK-001, which is over 90% of the subjects needed for the study. At the current pace, we expect to complete enrollment in the near-term. Occasionally, we get the question why has this study taken as long as it has to complete? And I can tell you, we’ve been meticulous in patient selection in order to provide the FDA with the most comprehensive data set as we pursue regulatory approval. It’s important to remember that gastroparesis is chronic disease in which patients experience layers of symptoms such as nausea and abdominal pain for example. Unfortunately, these layers are unpredictable and we must identify these patients at the appropriate time for screening for the trial, which can create challenges for the enrollment process. Furthermore, many of these patients are very ill, which can also create difficulties in subject selection. We have been working with some of the top sites in the U.S. and have developed a very good working relationship with them, to help us understand these patients -- this patient population and keep us on track. The unpredictability and the severity of this chronic disease further demonstrates the dire need for a new non-oral and more effective treatment option for these patients. Last month, we were excited to learn that the results of our successful Cardiac Safety Trial, also known as the Thorough QT trial, were accepted for presentation at the upcoming Digestive Disease Week conference or commonly known as DDW, in May. This is the world’s largest meeting and gathering of physicians and researchers in the field of gastroenterology. To our knowledge, EVK-001 is the only metoclopramide formulation to show no prolongation of the QT or the corrected QT interval in such a trial. The findings of this study are very clear

[Matt D’Onofrio:]

Thanks, Dave. Once again, thank you all for joining us this afternoon. Recently, we announced an amendment with our loan agreement with Square 1 Bank, now known as Pacific Western Bank, regarding certain covenants of our debt facility. We were able to extend the Phase 3 data reporting timeline to September 30, 2016. Given Dave’s earlier comments on the current subject recruitment and potential completion of this amendment, should give us appropriate time needed to report the data within the timeframe required by the covenant. We also feel it shows Square 1’s underlying belief in our program and long-term corporate value. In the fourth quarter, we reported a net loss of $2.6 million or $0.37 per share based on weighted average shares outstanding of approximately 7,123,163 shares as compared to a net loss of $2.9 million or $0.48 per share based on approximately 6,065,841 weighted average shares outstanding for the fourth quarter of 2014. R&D expenses in the fourth quarter were $1.7 million, down from $2.2 million in the fourth quarter of 2014. General and administrative expenses in the fourth quarter of 2015 were $843,000 compared with $738,000 in the fourth quarter of 2014. For the year ended December 31, 2015, net loss was $12.1 million or $1.87 per share based on approximately $6.4 million weighted average shares outstanding. This compares to a net loss of $13.2 million or $2.20 per share based on approximately $6 million weighted average shares outstanding during the year ended December 31, 2014. Research and development expenses during the year ended December 31, 2015 were $8.2 million compared with $10 million during the year ended December 31, 2014. The year-over-year decline in R&D expenses was primarily related to a prior year milestone payment and completion of Thorough QT trial. General and administrative expenses for the full year of 2015 totaled $3.7 million compared with $3.2 million in the same period a year ago. The increase is primarily related to increases in stock option based compensation expense and market research activity. Total operating expenses for the year ended December 31, 2015 were approximately $11.8 million compared to total operating expenses for the year ended December 31, 2014 of $13.2 million. And turning to our balance sheet, we ended 2015 with cash and cash equivalents of $8.7 million. That concludes our prepared remarks. We’d now like to open the call to questions. Operator?

[Operator:]

Thank you. At this time, we will be conduction a question-and-answer session. [Operator Instructions] Our first question is coming from the line of Yale Jen with Laidlaw. Please state your question.

[Yale Jen:]

Hey, good afternoon and thanks for taking the questions and congrats to approaching the data release. Just few quick questions, the first is that you also include a male patient, although those patients will not be counted, could you have any updates or any talk about that specific aspect?

[Dave Gonyer:]

Just to be clear, the two separate studies, both the different protocols, and I’ll let Marilyn jump in if she feels necessary. But there is completely separate study is enrolling, it’s like all the same site. But again males will go in male study, females in female study. We haven’t publicly disclosed any enrollment numbers for the male trial. But if you could guess it’s running similarly to the female, if you consider females are 80% of the population and 20% are male for gastroparesis.

[Yale Jen:]

Okay, great. That’s fine. And maybe just elaborate little bit in terms of what you anticipate to report at DDW meeting? That’s roughly little bit more than two months away, I assume that’s very close, [ph] may not be able to report the Phase 3 data but what other aspect do you intend to talk about at DDW?

[Dave Gonyer:]

I’ll let Marilyn discuss that, she wrote the poster that was accepted at DDW and should be presenting that while we are there. So, I’ll let her discus that for you, Yale.

[Dr. Marilyn Carlson:]

The data we’ll be presenting comes from a through ECG study in healthy volunteers and it was designed according to the ICH and FDA guidelines for Thorough QT study. And as Dave mentioned, our results are exemplary. And we will be excited to share the news. There have been question throughout the year about whether or not metoclopramide had any cardiac effect, some cardiac rhythm. And as Dave mentioned, this is the first definitive study to show that it does not, according to the design guidelines for studies such as this.

[Yale Jen:]

Okay. And the last question I have is one of the earlier press release that you have is that you retained it in terms filing and others. Would you be able to elaborate a little more on that as well as that if you will not be able to talk about the data, let’s assume it’s possible you will not be able to talk about the data at the DDW, what other I think medical conference then you might be able to start to talk more about this data? So, give us some sense of the future sort of prelaunch marketing plan.

[Dave Gonyer:]

So, in terms of medical conferences, DDW is a big one. AGA is also a big one that we potentially roll out the data. I think we will make a pretty good public announcement of the results. And there are plenty of the key opinion leaders that have interest and are watching for gastroparesis studies. So, I think we will have a pretty good audience with that. We’ll look forward to any venue we can in terms of getting the data out there but, DDW, we will make it for that and have the data for sure.

[Yale Jen:]

And what about a regular [ph] expert outside, so you have retained -- would that be additional color we can read into it?

[Dave Gonyer:]

Maybe I can explain. So, what we are doing because I have mentioned earlier about a 505(b)(2) NDA that the FDA agreed for us to pursue. We felt that it’d be appropriate to get the head start on compiling the NDA, assuming that we will have positive data. There are a number of items that we can pull together prior to data, so that when data is here and the study is complete, that will be the last piece that we can drop in. So, we are trying to get ahead of the curve, so that we can finalize the NDA fairly quickly after data.

[Yale Jen:]

Okay great, thanks. And we’ll be anticipating I guess.

[Dave Gonyer:]

Yes, we’re looking forward to it, should be exciting 2016.

[Operator:]

Our next question comes from the line of Difei Yang with Brean Capital. Please proceed with your question.

[Unidentified Analyst:]

Hey this Derrick [ph] in for Difei. How’s it going?

[Dave Gonyer:]

Good. How are you doing, Derrick?

[Unidentified Analyst:]

Good. So, just a couple of questions here. Can you just remind us on how many sites you are conduction the trial in?

[Dr. Marilyn Carlson:]

We have had the trial placed around 60 sites. And as with any trial, we have a number of top performers. But, we have initiated approximately 60.

[Unidentified Analyst:]

Okay, that’s helpful. And speaking on the trial, do you seeing any risks with regards to patient population or the primary endpoints, or any other factors that might go into it, associated with the study that might affect its probability of success, once it’s completely fully enrolled?

[Dave Gonyer:]

That’s good question, Derrick [ph]. You can never anticipate all the things that can happen in study. But I can tell you with Marilyn here as our Chief Medical Officer, she is very meticulous in patients getting in the study. So, we feel we’ve done everything we could to get the right patients in the trial. The piece I think is important to know as well is the FDA guidance came out in 2015, mirrored pretty much what we are doing in our Phase 3 trial in terms of the design and also the endpoint. And I would recommend anybody listening to read that guidance, if you get a chance, and then look at our protocol. It’s on clinicaltrials.gov, and you’ll see a very similar design as you do in that guidance.

[Unidentified Analyst:]

Okay, thanks. And I know that the share has gone up tremendously in last month; do you know what might have contributed to such increase in valuation?

[Dave Gonyer:]

Well, I think with the news that we have had over the last couple of weeks, we know as we are getting closer to that too, there is more interest from investors. We’ve had a lot of calls, a lot of discussions over the last several weeks as well. So, I think this is the excitement of where we are as a company and what’s coming in the next weeks to months, helps the stock quite a bit. Matt, do you have any comments?

[Matt D’Onofrio:]

It’s always difficult. I think it’s pretty traditional to see people being focused on upcoming data.

[Operator:]

Our next question is from the line of Adam Cohen with Rodman & Renshaw. Please pose your question.

[Adam Cohen:]

Hi. This is Adam Cohen calling in for Ram Selvaraju. I think you may have already touched on the question about what commercial preparations that are being made before the data is being announced on the EVK-001 trial. And also if launched, would you do it independently or you will find the partner; and if so, would it be through a distribution agreement or a licensing deal?

[Matt D’Onofrio:]

Sure. This is Matt D’Onofrio. Thanks for the question, Adam. We are excited to start talking about commercialization first and foremost. Both, Dave and I come from commercial backgrounds originally from back in the day Eli Lilly & Company and others. We have over the years been conducting what we would describe as the appropriate pieces to market research, payer research and some of that information that we’ve been discussing and have publicized through our corporate presentations and what not, all of which has been very positive in terms of opportunity and otherwise. In terms of preparations for that we have been actively strategizing as to the right size, how to approach the market, where in the market we want to penetrate, and then what kind of resources we would need to do so. The opportunity in part, and you described this in terms of the question on independent or otherwise, it’s fascinating that today with organizations that allow you to partner for sales forces, it does provide a lot more flexibility. We do have the capability of starting with a blank piece of paper, putting together a sales force. In fact Dave Gonyer here, he has actually run complete sales forces for specialty pharma kinds of structures, 100% sales forces and less. So, we as an organization have the understanding to do so. But we do have more options available in our marketplace today to partner with the organizations like inVentiv and Quintiles and others to consider, so not having to invest and finance a complete build from the start. We’ve been very capable at being a somewhat virtual firm to-date. And we are exploring all of those avenues to get there to see if we can do so in a more financially efficient manner. We do recognize that metoclopramide as a molecule, a good portion of the prescription written by GIs and a good portion of the patients that are identified to have gastroparesis are done so by GIs and then passed over to some internal measurement of persons, but the original diagnosis often does come from a GI itself. So by focusing in on that marketplace, we do believe we can be very efficient and very effective at attaining an appropriate penetration of the market to drive sales and the opportunity. We haven’t put out any specific timeline, specific guidance on sizes and otherwise that’s still under development; we’re in active negotiations and discussions internally with our board and with other appropriates and experts in the field.

[Operator:]

The next question is from the line of Vernon Bernardino with FBR. Please proceed with your question.

[Vernon Bernardino:]

Hi, guys. Thanks for taking my question. And congrats on the progress, definitely looking forward to activities this year. I just wanted to get some sights on the FDA guidelines. What is actually going to happen next, as far as the draft guidelines, so the draft and their comments right now, do you have any sense as to timing when the formal guidelines is expected to announce?

[Dr. Marilyn Carlson:]

Hi, Vernon. It’s Marilyn Carlson. That’s a good question. And if I had a crystal ball, I’d love to give you a good answer. If you look on the FDA website, you will see there are guidance documents that have been in draft for 10 to 12 years. So, it’s possible it will remain in draft unchanged and we will all follow it because that’s the best course of action or they could finalize it quickly, if they believe the comments haven’t been substantial. If there is anyone who really takes issue with it, it will probably cause them to undertake further deliberations and not just make a change because one person asks for it.

[Vernon Bernardino:]

And do you anticipate that -- obviously most of the time these draft guidelines are near final, do you anticipate any changes and what may we look for?

[Dr. Marilyn Carlson:]

No, I can’t speculate what that might be. You are right though and I would agree that most times when the FDA puts it out there, it’s because they believe it’s near final.

[Vernon Bernardino:]

And then, it definitely seems like your clinical trial seems to have been some model for that guideline. [Multiple speakers]

[Dr. Marilyn Carlson:]

Okay. When we saw the guidance, we thought that they had taken the information from our meeting minutes and just rolled them over into the guidance.

[Vernon Bernardino:]

Yes, I’ve looked to the minutes; that is really interesting. Congrats again that’s the fair setting. We have seen that.

[Operator:]

Our next question is from the line of Nathan Cali from Noble Life Science. Please proceed with your question.

[Nathan Cali:]

Hey, guys. Thanks for taking the questions. Quite few have been answered, but just a couple more. How soon do you think you could submit the NDA after you report your top line data?

[Dave Gonyer:]

That’s another good question and we appreciate that one. It’s a -- we are moving quickly now to do this I guess efficiently as I said to get prepared to submit. Until we have the data, until the study is done, we won’t be able to give a specific timeline. But I hope that once we do have the study completed, we will be able to give you a better idea when we are going to submit that. I can tell you, we are working on it now, as noted with the press release last week, and we hope to get it done very quickly after data.

[Nathan Cali:]

And do you think that will be a 10-month review?

[Dave Gonyer:]

Likely.

[Operator:]

[Operator Instruction] The next question will be coming from the line of Ben Haynor with Feltl and Company. Please go ahead with your question. Mr. Haynor, your line is open for questions.

[Dave Gonyer:]

Perhaps we lost him.

[Operator:]

Yes. I’ll move on to our next question and it’ll be Nathan Cali from Noble Life Science. Please go ahead with your question.

[Nathan Cali:]

Hey guys, sorry, just one quick follow-up question. Last patient into the study, will you announce that? And then how soon after, obviously on last patient I guess 28 days, so how soon after that do you think you can get some data out? Do, you have any assumption?

[Dave Gonyer:]

Yes. So, we will announce the last patient in. And as you said, it will be four weeks after that. What I’ve mentioned in my opening remarks that we have been -- the team here has a done a fantastic job of scribbling the database as we go along. So, we expect that we’ll be able to lock that database fairly quickly. So, expect data not too long after last patient out.

[Operator:]

And next question is a follow-up from the line of Yale Jen with Laidlaw. Please proceed with your question.

[Yale Jen:]

Thanks. A follow-up question, this is -- it’s sort of a different version of the earlier question that in terms of if potential partnership for the drug, do you anticipate some sort of a greater interest after you release the data or you already have some people potentially to look at in the data room and to make earlier decision, probably maybe after the data release or interest will come after the data release? I guess that the question.

[Matt D’Onofrio:]

Yale, so this is Matt. We have met with a number of strategic partners over the years. I guess the easiest way to say is GI has a landscape of potential companies had massive M&A in my opinion over the most recent term. Many, many companies have been joined and acquired into others. The feedback, we continue to get is that there is very few late stage and meaningful assets in the GI space. So, I believe that will translate into interest, whether or not anything ever comes of that, you never know. I do expect that we will be discussing data with companies when the time is right. But again, whether or not that leads to anything is complete conjecture at this point.

[Operator:]

Thank you. At this time, I would like to turn the floor back to management for closing remarks.

[Dave Gonyer:]

Great. Thank you. As I said, this will be an exciting year for Evoke; a lot of events to take place. We are very excited to finalize the trial and get to results. And as soon as we get closer, we will be making announcements and looking forward to keeping everybody up to date as we move forward. Thank you.

[Operator:]

Thank you. This concludes today’s teleconference. Thank you for your participation. And you may disconnect your lines at this time.