evok-10q_20210930.htm
false Q3 Evoke Pharma Inc 0001403708 --12-31 Non-accelerated Filer true false NASDAQ Upon the initiation of the first patient dosing in the Company’s Phase 3 clinical trial for Gimoti. 1 Depend on Gimoti’s commercial success. The Company is also required to pay Mallinckrodt a low single digit royalty percentage on net sales of Gimoti. 1 Common Stock, par value $0.0001 per share http://fasb.org/us-gaap/2021-01-31#ProductMember http://fasb.org/us-gaap/2021-01-31#ProductMember 0.0057 0.0039 P5Y6M P5Y6M 1.0345 0.9973 0.0108 0.0096 P6Y P6Y 1.0753 1.0399 0.0013 0.0111 0.6972 1.1198 0001403708 2021-01-01 2021-09-30 xbrli:shares 0001403708 2021-11-01 iso4217:USD 0001403708 2021-09-30 0001403708 2020-12-31 iso4217:USD xbrli:shares 0001403708 2021-07-01 2021-09-30 0001403708 2020-01-01 2020-09-30 0001403708 2020-07-01 2020-09-30 0001403708 us-gaap:CommonStockMember 2020-12-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001403708 us-gaap:RetainedEarningsMember 2020-12-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001403708 2021-01-01 2021-03-31 0001403708 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001403708 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001403708 us-gaap:CommonStockMember 2021-03-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001403708 us-gaap:RetainedEarningsMember 2021-03-31 0001403708 2021-03-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001403708 2021-04-01 2021-06-30 0001403708 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001403708 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001403708 us-gaap:CommonStockMember 2021-06-30 0001403708 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001403708 us-gaap:RetainedEarningsMember 2021-06-30 0001403708 2021-06-30 0001403708 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001403708 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001403708 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001403708 us-gaap:CommonStockMember 2021-09-30 0001403708 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001403708 us-gaap:RetainedEarningsMember 2021-09-30 0001403708 us-gaap:CommonStockMember 2019-12-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001403708 us-gaap:RetainedEarningsMember 2019-12-31 0001403708 2019-12-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001403708 2020-01-01 2020-03-31 0001403708 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001403708 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001403708 us-gaap:CommonStockMember 2020-03-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001403708 us-gaap:RetainedEarningsMember 2020-03-31 0001403708 2020-03-31 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001403708 2020-04-01 2020-06-30 0001403708 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0001403708 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001403708 us-gaap:CommonStockMember 2020-06-30 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001403708 us-gaap:RetainedEarningsMember 2020-06-30 0001403708 2020-06-30 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001403708 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001403708 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001403708 us-gaap:CommonStockMember 2020-09-30 0001403708 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001403708 us-gaap:RetainedEarningsMember 2020-09-30 0001403708 2020-09-30 xbrli:pure 0001403708 evok:COVID19Member 2020-01-01 2020-12-31 0001403708 evok:PaycheckProtectionProgramMember evok:COVID19Member 2020-05-01 2020-05-01 0001403708 evok:GimotiMember 2021-07-01 2021-09-30 0001403708 evok:CommonStockWarrantsMember 2021-07-01 2021-09-30 0001403708 evok:CommonStockWarrantsMember 2020-07-01 2020-09-30 0001403708 evok:CommonStockWarrantsMember 2021-01-01 2021-09-30 0001403708 evok:CommonStockWarrantsMember 2020-01-01 2020-09-30 0001403708 evok:CommonStockOptionsMember 2021-07-01 2021-09-30 0001403708 evok:CommonStockOptionsMember 2020-07-01 2020-09-30 0001403708 evok:CommonStockOptionsMember 2021-01-01 2021-09-30 0001403708 evok:CommonStockOptionsMember 2020-01-01 2020-09-30 0001403708 evok:EmployeeStockPurchasePlanMember 2020-07-01 2020-09-30 0001403708 evok:EmployeeStockPurchasePlanMember 2020-01-01 2020-09-30 0001403708 2007-06-01 2007-06-30 0001403708 evok:DevelopmentTargetOneMember evok:RightsAndPatentsAcquiredFromQuestcorPharmaceuticalsIncMember 2014-05-01 2014-05-31 0001403708 evok:DevelopmentTargetOneMember evok:RightsAndPatentsAcquiredFromQuestcorPharmaceuticalsIncMember 2021-01-01 2021-09-30 0001403708 evok:MallinckrodtPlcMember srt:MaximumMember evok:RightsAndPatentsAcquiredFromQuestcorPharmaceuticalsIncMember 2021-09-30 0001403708 evok:MallinckrodtPlcMember 2021-09-30 evok:Milestone 0001403708 evok:MallinckrodtPlcMember evok:GimotiMember 2021-01-01 2021-09-30 0001403708 evok:MallinckrodtPlcMember evok:GimotiMember 2021-06-30 0001403708 evok:MallinckrodtPlcMember evok:GimotiMember 2021-07-01 2021-07-31 0001403708 evok:DevelopmentTargetFourMember evok:MallinckrodtPlcMember us-gaap:PatentedTechnologyMember 2021-01-01 2021-09-30 0001403708 evok:DevelopmentTargetFourMember evok:MallinckrodtPlcMember us-gaap:PatentedTechnologyMember 2021-09-30 0001403708 us-gaap:IPOMember 2021-01-31 0001403708 us-gaap:IPOMember 2021-01-01 2021-01-31 0001403708 2017-11-30 0001403708 evok:FBRSalesAgreementMember 2021-09-30 0001403708 evok:FBRSalesAgreementMember 2020-09-30 0001403708 evok:FBRSalesAgreementMember srt:MaximumMember 2020-01-01 2020-09-30 0001403708 evok:AtTheMarketOfferingsMember srt:MaximumMember 2020-01-01 2020-12-31 0001403708 evok:AtTheMarketOfferingsMember 2021-01-01 2021-09-30 0001403708 evok:AtTheMarketOfferingsMember 2021-07-01 2021-09-30 0001403708 evok:AtTheMarketOfferingsMember 2021-09-30 0001403708 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001403708 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0001403708 us-gaap:EmployeeStockOptionMember 2020-06-01 2020-06-19 0001403708 evok:CommonStockOptionsMember srt:MinimumMember 2021-01-01 2021-09-30 0001403708 evok:CommonStockOptionsMember srt:MinimumMember 2020-01-01 2020-09-30 0001403708 evok:CommonStockOptionsMember srt:MaximumMember 2021-01-01 2021-09-30 0001403708 evok:CommonStockOptionsMember srt:MaximumMember 2020-01-01 2020-09-30 0001403708 evok:CommonStockOptionsMember 2021-01-01 2021-09-30 0001403708 evok:CommonStockOptionsMember 2020-01-01 2020-09-30 0001403708 evok:EmployeeStockPurchasePlanMember 2020-07-01 2020-09-30 0001403708 evok:EmployeeStockPurchasePlanMember 2021-01-01 2021-09-30 0001403708 evok:EmployeeStockPurchasePlanMember srt:MinimumMember 2020-01-01 2020-09-30 0001403708 evok:EmployeeStockPurchasePlanMember srt:MaximumMember 2020-01-01 2020-09-30 0001403708 evok:EmployeeStockPurchasePlanMember 2020-01-01 2020-09-30 0001403708 us-gaap:ResearchAndDevelopmentExpenseMember 2021-07-01 2021-09-30 0001403708 us-gaap:ResearchAndDevelopmentExpenseMember 2020-07-01 2020-09-30 0001403708 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-09-30 0001403708 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-09-30 0001403708 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-07-01 2021-09-30 0001403708 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-07-01 2020-09-30 0001403708 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-01-01 2021-09-30 0001403708 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-01-01 2020-09-30 0001403708 evok:GimotiMember srt:MinimumMember evok:EVERSANAAgreementMember 2020-01-21 2020-01-21 0001403708 evok:EVERSANAAgreementMember 2021-09-30 0001403708 evok:EVERSANAAgreementMember 2020-01-21 2020-01-21 0001403708 us-gaap:RevolvingCreditFacilityMember evok:EVERSANAAgreementMember 2020-01-21 0001403708 us-gaap:RevolvingCreditFacilityMember evok:EVERSANAAgreementMember 2020-01-21 2020-01-21 0001403708 us-gaap:RevolvingCreditFacilityMember evok:EVERSANAAgreementMember 2020-06-30 0001403708 us-gaap:RevolvingCreditFacilityMember evok:EVERSANAAgreementMember 2020-12-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-36075

 

EVOKE PHARMA, INC.

(Exact name of registrant as specified in its charter)  

 

 

Delaware

 

20-8447886

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification No.)

 

 

420 Stevens Avenue, Suite 370, Solana Beach, CA

 

92075

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (858) 345-1494

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock,

par value $0.0001 per share

EVOK

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer, ” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

 

 

Accelerated filer

 

 

Non-accelerated filer

 

  

 

Smaller reporting company

 

 

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 1, 2021, the registrant had 32,656,480 shares of common stock outstanding.

 

 

 

 

 


 

 

Evoke pharma, inc.  

Form 10-Q

TABLE OF CONTENTS

 

PART I.  FINANCIAL INFORMATION

1

 

Item 1.  Financial Statements

1

 

Condensed Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020

1

 

Condensed Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (Unaudited)

2

 

Condensed Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and 2020 (Unaudited)

3

 

Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited)

4

 

Notes to Condensed Financial Statements (Unaudited)

5

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

20

 

Item 4.  Controls and Procedures

20

 

PART II.  OTHER INFORMATION

21

 

Item 1.   Legal Proceedings

21

 

Item 1A.   Risk Factors

21

 

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

22

 

Item 3.   Defaults Upon Senior Securities

22

 

Item 4.   Mine Safety Disclosures

22

 

Item 5.   Other Information

22

 

Item 6.   Exhibits

23

 

SIGNATURES

25

 

 

 

 

i


 

 

PART I.  FINANCIAL INFORMATION

 

Item 1. Financial Statements

Evoke Pharma, Inc.  

Condensed Balance Sheets

 

 

 

September 30,

2021

 

 

December 31,

2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,141,908

 

 

$

8,068,939

 

Accounts receivable, net

 

 

222,166

 

 

 

23,311

 

Prepaid expenses

 

 

 

 

921,762

 

Inventory

 

 

225,217

 

 

 

236,480

 

Other current assets

 

 

11,551

 

 

 

30,300

 

Total current assets

 

 

11,600,842

 

 

 

9,280,792

 

Operating lease right-of-use asset

 

 

49,117

 

 

 

141,705

 

Other assets

 

 

 

 

11,551

 

Total assets

 

$

11,649,959

 

 

$

9,434,048

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity (deficit)

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

530,528

 

 

$

1,273,572

 

Accrued compensation

 

 

810,790

 

 

 

1,016,232

 

Operating lease liability

 

 

49,117

 

 

 

141,705

 

Paycheck protection program loan

 

 

 

 

104,168

 

Milestone payable

 

 

 

 

5,000,000

 

Total current liabilities

 

 

1,390,435

 

 

 

7,535,677

 

Long-term liabilities

 

 

 

 

 

 

 

 

Note payable

 

 

5,000,000

 

 

 

5,000,000

 

Accrued interest payable

 

 

486,268

 

 

 

112,994

 

Total long-term liabilities

 

 

5,486,268

 

 

 

5,112,994

 

Total liabilities

 

 

6,876,703

 

 

 

12,648,671

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized shares - 50,000,000;

  issued and outstanding shares - 32,656,480 and 26,621,954

  at September 30, 2021 and December 31, 2020, respectively

 

 

3,266

 

 

 

2,662

 

Additional paid-in capital

 

 

110,520,641

 

 

 

95,667,776

 

Accumulated deficit

 

 

(105,750,651

)

 

 

(98,885,061

)

Total stockholders' equity (deficit)

 

 

4,773,256

 

 

 

(3,214,623

)

Total liabilities and stockholders' equity (deficit)

 

$

11,649,959

 

 

$

9,434,048

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these unaudited condensed financial statements.

 


1


 

 

Evoke Pharma, Inc.  

Condensed Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net product sales

 

$

930,449

 

 

$

 

 

$

1,257,505

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Cost of goods sold

 

 

58,435

 

 

 

 

 

191,439

 

 

 

     Research and development

 

 

81,699

 

 

 

205,032

 

 

 

554,753

 

 

 

6,450,979

 

     Selling, general and administrative

 

 

2,635,161

 

 

 

1,874,578

 

 

 

7,115,605

 

 

 

4,387,284

 

Total operating expenses

 

 

2,775,295

 

 

 

2,079,610

 

 

 

7,861,797

 

 

 

10,838,263

 

Loss from operations

 

 

(1,844,846

)

 

 

(2,079,610

)

 

 

(6,604,292

)

 

 

(10,838,263

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Forgiveness of paycheck protection loan and accrued

         interest

 

 

 

 

 

 

105,130

 

 

 

     Interest income

 

 

1,421

 

 

 

1,033

 

 

 

7,596

 

 

 

4,896

 

     Interest expense

 

 

(126,027

)

 

 

(50,528

)

 

 

(374,024

)

 

 

(53,442

)

Total other income (expense)

 

 

(124,606

)

 

 

(49,495

)

 

 

(261,298

)

 

 

(48,546

)

Net loss

 

$

(1,969,452

)

 

$

(2,129,105

)

 

$

(6,865,590

)

 

$

(10,886,809

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of common stock, basic and diluted

 

$

(0.06

)

 

$

(0.08

)

 

$

(0.21

)

 

$

(0.43

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to compute basic and

     diluted net loss per share

 

 

32,542,481

 

 

 

26,146,220

 

 

 

32,028,850

 

 

 

25,191,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these unaudited condensed financial statements.

 


2


 

 

Evoke Pharma, Inc.  

Condensed Statements of Stockholders’ Equity (Deficit)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at January 1, 2021

 

 

26,621,954

 

 

$

2,662

 

 

$

95,667,776

 

 

$

(98,885,061

)

 

$

(3,214,623

)

     Stock-based compensation expense

 

 

 

 

 

 

561,348

 

 

 

 

 

561,348

 

     Issuance of common stock, net of

       costs of $1,304,846

 

 

5,750,000

 

 

575

 

 

 

13,069,579

 

 

 

 

 

13,070,154

 

     Net loss

 

 

 

 

 

 

 

 

(2,605,495

)

 

 

(2,605,495

)

Balance at March 31, 2021

 

 

32,371,954

 

 

 

3,237

 

 

 

109,298,703

 

 

 

(101,490,556

)

 

 

7,811,384

 

     Stock-based compensation expense

 

 

 

 

 

 

399,411

 

 

 

 

 

399,411

 

     Issuance of common stock from

       stock option exercises

 

 

67,426

 

 

 

7

 

 

 

45,447

 

 

 

 

 

45,454

 

     Net loss

 

 

 

 

 

 

 

 

(2,290,643

)

 

 

(2,290,643

)

Balance at June 30, 2021

 

 

32,439,380

 

 

 

3,244

 

 

 

109,743,561

 

 

 

(103,781,199

)

 

 

5,965,606

 

     Stock-based compensation expense

 

 

 

 

 

 

463,995

 

 

 

 

 

463,995

 

     Issuance of common stock from

       At-the-Market offering, net of

       costs of $6,421

 

 

217,100

 

 

 

22

 

 

 

313,085

 

 

 

 

 

313,107

 

     Net loss

 

 

 

 

 

 

 

 

(1,969,452

)

 

 

(1,969,452

)

Balance at September 30, 2021

 

 

32,656,480

 

 

$

3,266

 

 

$

110,520,641

 

 

$

(105,750,651

)

 

$

4,773,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at January 1, 2020

 

 

24,431,914

 

 

$

2,443

 

 

$

90,108,492

 

 

$

(85,730,390

)

 

$

4,380,545

 

     Stock-based compensation expense

 

 

 

 

 

 

310,162

 

 

 

 

 

310,162

 

     Issuance of common stock from

       employee stock purchase plan

 

 

25,000

 

 

3

 

 

 

21,247

 

 

 

 

 

21,250

 

     Net loss

 

 

 

 

 

 

 

 

(1,790,309

)

 

 

(1,790,309

)

Balance at March 31, 2020

 

 

24,456,914

 

 

 

2,446

 

 

 

90,439,901

 

 

 

(87,520,699

)

 

 

2,921,648

 

     Stock-based compensation expense

 

 

 

 

 

 

362,955

 

 

 

 

 

362,955

 

     Issuance of common stock from

       At-the-Market offering, net of

       costs of $68,038

 

 

1,395,855

 

 

 

140

 

 

 

3,308,976

 

 

 

 

 

3,309,116

 

     Issuance of common stock from

       warrant exercises

 

 

158,494

 

 

 

15

 

 

 

(15

)

 

 

 

 

     Net loss

 

 

 

 

 

 

 

 

(6,967,395

)

 

 

(6,967,395

)

Balance at June 30, 2020

 

 

26,011,263

 

 

 

2,601

 

 

 

94,111,817

 

 

 

(94,488,094

)

 

 

(373,676

)

     Stock-based compensation expense

 

 

 

 

 

 

478,574

 

 

 

 

 

478,574

 

     Issuance of common stock from

       employee stock purchase plan

 

 

93,491

 

 

9

 

 

 

98,156

 

 

 

 

 

98,165

 

     Issuance of common stock from

       warrant exercises

 

 

223,131

 

 

22

 

 

 

(22

)

 

 

 

 

     Issuance of common stock from

      stock option exercise

 

 

4,237

 

 

1

 

 

 

2,626

 

 

 

 

 

2,627

 

     Net loss

 

 

 

 

 

 

 

 

(2,129,105

)

 

 

(2,129,105

)

Balance at September 30, 2020

 

 

26,332,122

 

 

$

2,633

 

 

$

94,691,151

 

 

$

(96,617,199

)

 

$

(1,923,415

)

 

See accompanying notes to these unaudited condensed financial statements.

3


 

 

Evoke Pharma, Inc.  

Condensed Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(6,865,590

)

 

$

(10,886,809

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Forgiveness of paycheck protection loan and accrued interest

 

 

(105,130

)

 

 

Stock-based compensation expense

 

 

1,424,754

 

 

 

1,151,691

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(198,855

)

 

 

Prepaid expenses, inventory and other assets

 

 

1,055,913

 

 

 

261,552

 

Accounts payable and other current liabilities

 

 

(835,632

)

 

 

(370,639

)

Accrued compensation

 

 

(205,442

)

 

 

(127,740

)

Accrued interest expense

 

 

374,236

 

 

 

53,442

 

Milestone payable

 

 

(5,000,000

)

 

 

5,000,000

 

Net cash used in operating activities

 

 

(10,355,746

)

 

 

(4,918,503

)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net

 

 

13,070,154

 

 

 

Proceeds from issuance of common stock from ATM, net

 

 

313,107

 

 

 

3,309,116

 

Proceeds from issuance of common stock from exercise of stock options

 

 

45,454

 

 

 

2,627

 

Proceeds from issuance of common stock from employee stock purchase plan

 

 

 

 

119,415

 

Proceeds from paycheck protection program

 

 

 

 

104,168

 

Proceeds from Eversana line of credit

 

 

 

 

 

 

2,000,000

 

Net cash provided by financing activities

 

 

13,428,715

 

 

 

5,535,326

 

Net increase in cash and cash equivalents

 

 

3,072,969

 

 

 

616,823

 

Cash and cash equivalents at beginning of period

 

 

8,068,939

 

 

 

5,663,833

 

Cash and cash equivalents at end of period

 

$

11,141,908

 

 

$

6,280,656

 

 

 

 

 

 

 

 

 

 

Non-cash financing activities

 

 

 

 

 

 

 

 

Forgiveness of paycheck protection loan and accrued interest

 

$

105,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these unaudited condensed financial statements.

 

 

4


 

 

Evoke Pharma, Inc.  

Notes to Condensed Financial Statements

(Unaudited)

 

1.  Organization and Basis of Presentation

Evoke Pharma, Inc. (the “Company”) was incorporated in the state of Delaware in January 2007. The Company is a specialty pharmaceutical company focused primarily on the development and commercialization of drugs to treat gastroenterological disorders and disease.

Since its inception, the Company has devoted its efforts to developing its sole product, Gimoti™ (metoclopramide) nasal spray, the first and only nasally-administered product indicated for the relief of symptoms in adults with acute and recurrent diabetic gastroparesis. On June 19, 2020, the Company received approval from the U.S. Food and Drug Administration (“FDA”) for its 505(b)(2) New Drug Application (“NDA”) for Gimoti. As discussed in Note 5, the Company launched U.S. commercial sales of Gimoti in October 2020 through its commercial partner Eversana Life Science Services, LLC (“Eversana”).

The Company’s activities are subject to the significant risks and uncertainties associated with any specialty pharmaceutical company that has launched its first commercial product, including market acceptance of the product and the potential need to obtain additional funding for its operations.

Going Concern

The financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and negative cash flows from operations since inception and expects to continue to incur net losses for the foreseeable future until such time, if ever, that it can generate significant revenues from the sale of Gimoti. As of September 30, 2021, the Company had approximately $11.1 million in cash and cash equivalents. The Company anticipates that it will continue to incur losses from operations due to commercialization activities for Gimoti, including manufacturing Gimoti, conducting the post-marketing commitment single-dose pharmacokinetics (“PK”) clinical trial of Gimoti to characterize dose proportionality of a lower dose strength of Gimoti, and for other general and administrative costs to support the Company’s operations. As a result, the Company believes that there is substantial doubt about its ability to continue as a going concern for one year after the date these financial statements are issued. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.

The Company’s net losses may fluctuate significantly from quarter to quarter and year to year. The Company anticipates that it will be required to raise additional funds through debt, equity or other forms of financing, such as potential collaboration arrangements, to fund future operations and continue as a going concern.

There can be no assurance that additional financing will be available when needed or on acceptable terms. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, and/or suspend or curtail commercialization activities. Any of these actions could materially harm the Company’s business, results of operations, financial condition and future prospects. There can be no assurance that the Company will be able to successfully commercialize Gimoti. Because the Company’s business is entirely dependent on the success of Gimoti, if the Company is unable to secure additional financing, successfully commercialize Gimoti or identify and execute on strategic alternatives for Gimoti, the Company will be required to curtail all of its activities and may be required to liquidate, dissolve or otherwise wind down its operations.

Impact of COVID-19

Despite the COVID-19 pandemic, the Company began its commercial sales of Gimoti with Eversana in October 2020. The Company has experienced various disruptions to its sales activities, but have continued efforts to reach physicians and customers. For example, Eversana’s commercialization efforts at the time the Company launched Gimoti was adversely affected by operational restrictions imposed on its sales force from quarantines, travel restrictions and bans, and other governmental restrictions related to COVID-19. As a result of these restrictions, Eversana’s sales force was restricted from conducting in-person interactions with certain physicians and customers and was restricted to conducting Gimoti educational and promotional activities virtually in certain circumstances, which impacted Eversana’s ability to more actively market Gimoti.  In recent months, certain physician offices have begun to allow in-person interactions, which has helped to increase the educational and promotional activities of the sales force. Research conducted by IOVIA stated that as a result of COVID-19, fewer patients visited physician offices during the pandemic resulting in lower patient volumes than normal, and the Centers for Disease Control and Prevention reported during 2020 that over 40% of patients avoided care due to COVID-19. The Company anticipates that it and Eversana will continue to be impacted by the COVID-19 pandemic to some extent.

The COVID-19 pandemic has not significantly disrupted the operations of the Company’s third-party suppliers and manufacturers or delayed the Company’s manufacturing timelines of Gimoti, but may negatively impact the Company’s ability to successfully

5


 

commercialize Gimoti and generate product sales in the future. Further, the COVID-19 pandemic and related mitigation measures have also had an adverse impact on global economic conditions which could have an adverse effect on the Company’s future business and financial condition, including impairing its ability to raise capital when needed.

In March 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in response to the COVID-19 pandemic. In April 2020, the Company applied for and was approved for a Small Business Administration (“SBA”) loan under the Paycheck Protection Program, established by the CARES Act. On May 1, 2020, the Company received the loan proceeds of approximately $104,000. In January 2021, the Company received notice that its loan and accrued interest were forgiven by the SBA.

2. Summary of Significant Accounting Policies

The accompanying condensed balance sheet as of December 31, 2020, which has been derived from audited financial statements, and the unaudited interim condensed financial statements, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting.  As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted.  In management’s opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position and its results of operations and its cash flows for the periods presented. These statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the year ended December 31, 2020, which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2021. The results for interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates.

Contract Research Organizations and Consultants

The Company relies on contract research organizations (“CROs”) and consultants to assist with ongoing regulatory activities. If the CROs and consultants are unable to continue their support, this could adversely affect the Company’s operations.

In addition, the Company relies on third-party manufacturers for the production of Gimoti. If the third-party manufacturers are unable to continue manufacturing Gimoti, or if the Company loses one of its sole source suppliers used in its manufacturing processes, the Company may not be able to meet any development needs or commercial supply demand for Gimoti, and the development and/or commercialization of Gimoti could be materially and adversely affected.

The Company also relies on a dedicated third-party sales team to sell Gimoti. If such third-party organization is unable to continue serving as a dedicated sales team, the commercialization of Gimoti could be materially and adversely affected.

Accounts Receivable

Accounts receivable is recorded net of allowance for doubtful accounts. Estimates for allowances for doubtful accounts are determined based on existing contractual obligations and historical payment patterns. The allowance for doubtful accounts was zero at September 30, 2021 and December 31, 2020 and no bad debt expense was recorded for the nine months ended September 30, 2021.

Inventory

The Company does not own or operate manufacturing facilities for the production of Gimoti, nor does it plan to develop its own manufacturing operations in the foreseeable future. The Company depends on third-party contract manufacturers for all of its required raw materials, drug substance and finished product for its commercial manufacturing. The Company has agreements with Cosma S.p.A. to supply metoclopramide for the manufacture of Gimoti, and with Thermo Fisher Scientific Inc., through its subsidiary Patheon UK Limited, for the manufacturing of Gimoti. The Company currently utilizes third-party consultants, which it engages on an as-needed, hourly basis, to manage the manufacturing contractors.

Prior to FDA approval of Gimoti in June 2020, the cost of materials and expenses associated with the manufacturing of Gimoti were recorded as research and development expense. Subsequent to FDA approval, the Company began manufacturing Gimoti for commercialization and began capitalizing inventory. The Company’s inventory consisted of approximately $150,000 of raw materials at September 30, 2021 and December 31, 2020, and approximately $75,000 and $86,000 of finished goods at September 30, 2021 and December 31, 2020, respectively. Inventories are stated at the lower of cost (first-in first-out basis) or net realizable value. Inventory when written down to net realizable value establishes a new cost basis and its value is not subsequently increased based upon changes in underlying facts and circumstances. The Company’s raw materials inventory is held at its third-party suppliers and its finished goods inventory is held at its contract manufacturer and at Eversana. The Company records such inventory as consigned inventory.

6


 

Revenue Recognition

The Company’s ability to generate revenue and become profitable depends on its ability to successfully commercialize Gimoti, which was launched in the United States through prescription in October 2020 through the Company’s commercial partner Eversana. If the Company or Eversana fail to successfully launch Gimoti and grow and maintain sales, the Company may never generate significant revenues and its results of operations and financial position will be adversely affected.

In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods in an amount that reflects the consideration the Company expects to receive in exchange for the goods provided. Customer control is determined upon the customer’s physical receipt of the product. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: identify the contracts with the customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) it satisfies a performance obligation. At contract inception, the Company assesses the goods promised within each contract and determines those that are performance obligations and assesses whether each promised good is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the customer obtains control of the product.

Product sales are recorded at the transaction price, which may include variable considerations for co-payment assistance to commercially insured patients meeting certain eligibility requirements, as well as to uninsured patients. Co-payment assistance is recorded as an offset to gross revenue at the time revenue from the product sale is recognized based on expected and actual program participation. Co-pay liabilities are estimated using prescribing data available from customers. Actual amounts of consideration ultimately received may materially differ from the Company’s estimates. If actual results in the future vary from estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

During the three months ended September 30, 2021, approximately $683,000 of Gimoti was sold to a third party for research purposes.

Liabilities for co-pay assistance are classified as accounts payable and accrued expenses in the balance sheets.

 

Stock-Based Compensation

Stock-based compensation expense for stock option grants and employee stock purchases under the Company’s Employee Stock Purchase Plan (the “ESPP”) is recorded at the estimated fair value of the award as of the grant date and is recognized as expense on a straight-line basis over the employee’s requisite service period, except awards with a performance condition. Awards with a performance condition commence vesting when the satisfaction of the performance condition is probable. The estimation of stock option and ESPP fair value requires management to make estimates and judgments about, among other things, employee exercise behavior, forfeiture rates and volatility of the Company’s common stock. The judgments directly affect the amount of compensation expense that will be recognized.

The Company grants stock options to purchase common stock to employees and members of the board of directors with exercise prices equal to the Company’s closing market price on the date the stock options are granted. The risk-free interest rate assumption was based on the yield of an applicable rate for U.S. Treasury instruments with maturities similar to those of the expected term of the award being valued. The weighted average expected term of options and employee stock purchases was calculated using the simplified method as prescribed by accounting guidance for stock-based compensation. This decision was based on minimal historical data due to the Company’s limited number of stock option exercises. In addition, due to the Company’s limited historical data, the estimated volatility was calculated based upon the Company’s historical volatility, supplemented, as necessary, with historical volatility of comparable companies in the biotechnology industry whose share prices are publicly available for a sufficient period of time. The assumed dividend yield was based on the Company never paying cash dividends and having no expectation of paying cash dividends in the foreseeable future. The Company accounts for forfeitures as the forfeitures occur.

Research and Development Expenses

Research and development costs are expensed as incurred and primarily include compensation and related benefits, stock-based compensation expense, costs paid to third-party contractors for product development activities and drug product materials, and technology acquisition milestones. The Company has expensed costs relating to the purchase and production of pre-approval inventories as research and development expense in the period incurred prior to FDA approval received on June 19, 2020. The Company will expense the clinical, regulatory and manufacturing costs related to the post-marketing commitment to conduct a single dose pharmacokinetics clinical trial of Gimoti to characterize dose proportionality of a lower dose strength of Gimoti, as well
as other costs that may occur for any additional clinical trials the Company may pursue to expand the indication of Gimoti.


7


 

 

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common stock outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method.  Dilutive common stock equivalents are comprised of warrants to purchase common stock, options to purchase common stock under the Company’s equity incentive plans and potential shares to be purchased under the ESPP.

For the periods presented, the following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive: 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Warrants to purchase common stock

 

 

1,679,673

 

 

 

1,841,879

 

 

 

1,679,673

 

 

 

1,841,879

 

Common stock options

 

 

5,150,333

 

 

 

4,273,065

 

 

 

5,150,333

 

 

 

4,273,065

 

Employee stock purchase plan

 

 

 

 

4,716

 

 

 

 

 

4,716

 

Total excluded securities

 

 

6,830,006

 

 

 

6,119,660

 

 

 

6,830,006

 

 

 

6,119,660

 

 

3. Technology Acquisition Agreement

In June 2007, the Company acquired all worldwide rights, data, patents and other related assets associated with Gimoti from Questcor Pharmaceuticals, Inc. (“Questcor”) pursuant to an asset purchase agreement. The Company paid Questcor $650,000 in the form of an upfront payment and $500,000 in May 2014 as a milestone payment based upon the initiation of the first patient dosing in the Company’s Phase 3 clinical trial for Gimoti. In August 2014, Mallinckrodt, plc (“Mallinckrodt”) acquired Questcor. As a result of that acquisition, Questcor transferred its rights included in the Asset Purchase Agreement with the Company to Mallinckrodt. In addition to the payments previously made to Questcor, the Company may also be required to make additional milestone payments totaling up to $52 million. In March 2018, the Company and Mallinckrodt amended the asset purchase agreement to defer development and approval milestone payments, such that, rather than paying two milestone payments based on FDA acceptance for review of the NDA and final product marketing approval, the Company would be required to make a single $5 million payment on the one-year anniversary after the Company receives FDA approval to market Gimoti. At the time of the Gimoti NDA approval by FDA, the Company recorded the $5 million payable owed to Mallinckrodt, along with a $5 million research and development expense. The $5 million milestone payment was paid in July 2021.

The remaining $47 million in milestone payments depend on Gimoti’s commercial success. The Company is also required to pay Mallinckrodt a low single digit royalty percentage on net sales of Gimoti. As of September 30, 2021, the Company has paid Mallinckrodt approximately $14,000 in royalties on net sales of Gimoti. The Company’s obligation to pay such royalties will terminate upon the expiration of the last patent right covering Gimoti, which is expected to occur in 2030, subject to possible extension should any additional, later expiring, licensed patents be granted.

4. Stockholders’ Equity

Sale of Common Stock in Public Offering

In January 2021, the Company completed the sale of 5,750,000 shares of its common stock in an underwritten public offering. The price to the public in this offering was $2.50 per share resulting in gross proceeds to the Company of approximately $14.4 million. After deducting underwriting discounts and commissions and offering expenses paid by the Company, the net proceeds to the Company raised from this offering were approximately $13.1 million.

At the Market Equity Offering Program 

In November 2017, the Company filed a shelf registration statement with the SEC on Form S-3. The shelf registration statement included a prospectus for the at-the-market offering to sell up to an aggregate of $16.0 million of shares of the Company’s common stock through B. Riley FBR, Inc. (“FBR”) as a sales agent (the “FBR Sales Agreement”). During the nine months ended September 30, 2020, the Company sold 1,395,855 shares of common stock at a weighted-average price per share of $2.42 pursuant to the FBR Sales Agreement and received proceeds of approximately $3.3 million, net of commission and fees. Effective January 6, 2021, the Company terminated the FBR Sales Agreement. As a result, there were no shares sold under the FBR Sales Agreement during 2021.

In December 2020, the Company filed a new shelf registration statement with the SEC on Form S-3, or the replacement shelf registration statement. The replacement shelf registration statement replaced the registration statement on Form S-3 the Company originally filed with the SEC in November 2017, which registration statement expired in December 2020. The replacement shelf registration was declared effective by the SEC on January 6, 2021. In December 2020, the Company also entered into a new At Market Issuance Sales Agreement (the “ATM Sales Agreement”), with FBR and H.C. Wainwright & Co. (together with FBR, the “Sales Agents”), pursuant to which the Company may sell from time to time, at its option, up to an aggregate of $30 million worth of shares of

8


 

the Company’s common stock through the Sales Agents. The ATM Sales Agreement provides, among other things, that sales under the ATM Sales Agreement will be made pursuant to the replacement shelf registration statement, including the base prospectus filed as part of such registration statement. During the three and nine months ended September 30, 2021, the Company sold 217,100 shares of common stock at a weighted-average price per share of $1.47 pursuant to the ATM Sales Agreement and received proceeds of approximately $313,000, net of commissions and fees.

Future sales under the ATM Sales Agreement will depend on a variety of factors including, but not limited to, market conditions, the trading price of the Company’s common stock and the Company’s capital needs. There can be no assurance that the Sales Agents will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that the Company deems appropriate.

In addition, the Company will not be able to make future sales of common stock pursuant to the ATM Sales Agreement unless certain conditions are met, which include the accuracy of representations and warranties made to the Sales Agents under the ATM Sales Agreement. Furthermore, each of the Sales Agents is permitted to terminate the ATM Sales Agreement with respect to itself in its sole discretion upon ten days’ notice, or at any time in certain circumstances, including the occurrence of an event that would be reasonably likely to have a material adverse effect on the Company’s assets, business, operations, earnings, properties, condition (financial or otherwise), prospects, stockholders’ equity or results of operations. The Company has no obligation to sell the shares available for sale pursuant to the ATM Sales Agreement.

Stock-Based Compensation

During the nine months ended September 30, 2021 and 2020, the Company granted stock options to purchase 1,682,000 and 1,172,000 shares of the Company’s common stock, respectively. Of the options granted in 2020, 437,500 did not begin vesting until June 19, 2020, the date that FDA approved the Gimoti NDA. The estimated fair value of each stock option award granted was determined on the date of grant using the Black-Scholes option-pricing valuation model with the following weighted-average assumptions for option grants during the nine months ended September 30, 2021 and 2020:

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

Common Stock Options

 

 

 

 

 

 

 

 

Risk free interest rate

 

0.57% - 1.08%

 

 

0.39%-0.96%

 

Expected option term

 

5.5 - 6.0 years

 

 

5.5-6.0 years

 

Expected volatility of common stock

 

103.45% - 107.53%

 

 

99.73%-103.99%

 

Expected dividend yield

 

0.0%

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

The estimated fair value of the shares to be acquired under the ESPP was determined on the initiation date of each six-month purchase period using the Black-Scholes option-pricing valuation model with the following weighted-average assumptions for ESPP shares to be purchased during the three and nine months ended September 30, 2021 and 2020:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

2020

 

 

2021

 

 

2020

 

Employee Stock Purchase Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk free interest rate

 

 

0.13%

 

 

0.13%

 

 

0.13% - 1.11%

 

Expected term

 

 

0.5 years

 

 

0.5 years

 

 

0.5 years

 

Expected volatility of common stock

 

 

111.98%

 

 

111.98%

 

 

69.72% - 111.98%

 

Expected dividend yield

 

 

0.0%

 

 

0.0%

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There were no employee withholdings to purchase shares during the six-month purchase period beginning March 1 and September 1, 2021.

9


 

The Company recognized stock-based compensation expense to employees and directors in its research and development and its selling, general and administrative functions during the three and nine months ended September 30, 2021 and 2020 as follows:

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Research and development

 

$

7,310

 

 

$

31,186

 

 

$

99,510

 

 

$

286,148

 

Selling, general and administrative

 

 

456,685

 

 

 

447,388

 

 

 

1,325,244

 

 

 

865,543

 

Total stock-based compensation expense

 

$

463,995

 

 

$

478,574

 

 

$

1,424,754

 

 

$

1,151,691