Evoke Pharma’s Financial Performance and Outlook

Evoke Pharma is a specialty pharmaceutical company focused on developing and commercializing drugs to treat gastrointestinal (GI) disorders. Their sole product is Gimoti, a nasal spray approved in 2020 for the relief of symptoms in adults with acute and recurrent diabetic gastroparesis.

Revenue and Profit Trends

Evoke Pharma launched Gimoti in the United States in October 2020 through a commercial partnership with Eversana. Net product sales for Gimoti have been steadily increasing, reaching $10.2 million in 2024 compared to $5.2 million in 2023 - a 97.8% increase.

Several factors have contributed to the growth in Gimoti sales:

• Improved prescription approval and fill rates after transitioning pharmacy services to ASPN Pharmacy in late 2023. This helped capture more out-of-network prescriptions.

• Expansion of the pharmacy network, which improved insurance coverage and reduced reliance on savings programs.

• Greater adoption by physicians, especially within larger gastroenterology practices, as more doctors saw the benefits of Gimoti.

• Higher refill rates, as 67% of eligible patients opted to refill their Gimoti prescriptions.

However, Evoke Pharma continues to operate at a loss. Cost of goods sold increased 77% in 2024 due to higher stability testing costs and the overall sales volume increase. Research and development expenses decreased 91% as the focus shifted to commercialization. Selling, general and administrative expenses rose 23% primarily due to increased marketing and profit-sharing with Eversana.

Strengths and Weaknesses

A key strength for Evoke Pharma is the clinical data supporting Gimoti. Studies have shown that patients taking Gimoti experience significantly fewer physician visits, emergency department visits, and hospitalizations compared to those taking oral metoclopramide. This translated to around $15,000 in cost savings per patient over six months. Key opinion leaders have also presented data indicating a lower incidence of tardive dyskinesia, a serious side effect, with Gimoti compared to previous reports.

However, Evoke Pharma faces several challenges. They received a Nasdaq notice in 2023 for not meeting the minimum stockholders’ equity requirement, though they were able to regain compliance through a reverse stock split. The company also faces the risk of Eversana, their commercial partner, exercising its right to terminate the agreement, which would require Evoke Pharma to establish its own commercial infrastructure at substantial cost.

Additionally, Evoke Pharma’s business is entirely dependent on the success of Gimoti. If they are unable to secure additional financing or identify strategic alternatives, they may be forced to curtail operations or even liquidate, which could result in a complete loss for investors.

Outlook and Future Plans

Evoke Pharma’s current cash balance of $13.6 million as of December 31, 2024, combined with expected cash flows from Gimoti sales, is intended to fund commercialization activities, including manufacturing, the post-marketing commitment study, and general operations. However, management believes there is substantial doubt about the company’s ability to continue as a going concern for more than a year due to the risk of Eversana’s termination of the agreement and the need for additional funding.

To address this, Evoke Pharma has taken several actions, including:

• Selling common stock and pre-funded warrants in a public offering in 2024, raising $6.2 million in net proceeds.
• Amending warrant agreements to allow holders to exercise warrants for pre-funded warrants, generating an additional $1.9 million in net cash proceeds.
• Entering into an amendment to reduce the exercise price of certain warrants, generating $2.5 million in net proceeds.

The company is also in discussions with the FDA regarding the design of a post-marketing commitment study to evaluate a lower dose strength of Gimoti. If this study is required, it could result in significant additional research and development expenses.

Overall, Evoke Pharma has made progress in growing Gimoti sales, but the company’s long-term viability remains uncertain due to its reliance on a single product and the risk of losing its commercial partner. Continued execution on the commercial strategy and successful fundraising efforts will be crucial for the company’s future.