Evoke Pharma, Inc. (EVOK) Earnings Call Transcript & Summary

Good afternoon. My name is Yale Jen, Senior Biotech Analyst of Laidlaw & Company. We appreciate you attending our fireside chat this afternoon to discuss the treatment landscape of gastroparesis, and the real-world usage experience of recently launched a drug called GIMOTI, which is a nasal spread metoclopramide. First, we have to apologize that the other invited speaker, Dr. [indiscernible], cannot attend this meeting due to some personal unique circumstances. And this afternoon, we are very honored to have Dr. Richard McCallum from Texas Tech University Health Science Center at El Paso to provide his insight. He has a very outstanding career in medicine, both in clinic, gastroenterologist and in research. He is the Professor of Medicine in division of Gastroenterology. He also is the founding Chair of the Medicine -- the Texas Tech Health Science Center at El Paso. He was elected to the American Society for Clinical Investigation and he's also a fellow of American College of physicians. Dr. McCallum has published more than 390 articles in peer-reviewed scientific journals, 100 textbook chapters and has added 13 scientific textbooks. His research has been focused on the physiology pathophysiology, pharmacology of gastrointestinal smooth muscle relating to disorders of mortality, and functional bowel disease involving the esophagus, stomach, small bowel and colon. So first, welcome, and thank you, Dr. McCallum.

Thanks very much.

You're welcome. And, first, could you provide us a little bit more information if I'm missing anything? And also, maybe talk a little bit about your medical practice.

Yes. Well, I think the only -- we don't want to take up much time. I think, 2 areas are important that we have had continuous NIH funding for the topic of gastroparesis for the last 15 years, and that's always hard to do and hard to sustain. So we're very proud of that. And we just published a major landmark textbook on gastroparesis. Elsevier was the publishing company. It came out, I think, last November. So we're very proud of sort of having a major footprint in that world. My practice -- I'm an academic, so I've been in this area for the last 45 years or so, running departments of GI and medicine and conducting a research team, teaching and being involved in national societies, but mostly seeing patients. I like to remain in the grassroots, so to speak. I like to see patients and learn from them and try to help them. So I have clinics each week. I do endoscopies, do procedures, study mortalities, tracings of the esophagus and stomach. And generally, try to juggle a lot of balls at the same time, which all do, I'm sure. So that's a snapshot.

Okay. Great. That's very helpful. And I think -- I'm going to prove our questions probably into 2 groups. One is to -- just the general aspect of the gastroparesis, the illness and the management. And the second group will be talking about therapies, especially the use of GIMOTI in the real-world settings. So my first question is, in order to lever in the playing field for all our participants, could you first just give us a brief description of gastroparesis?

Sure. So gastroparesis, in its simplistic form -- patients ask me doctor, what is that term? It's rather a daunting word. It's a lazy stomach. Like, your stomach is not emptying the caloric content of your meal on time. It's staying in the stomach longer than usual, resulting in symptoms. And the reason it's staying in the stomach is not because of any obstruction or mechanical problem. This is a problem where your nerves and muscles are not working properly, and they can't grind up the food, the term is called trituration, mix it up and eventually expert into the small bowel to be absorbed. That would be it in a nutshell.

Okay. Great. And that how would you generally treat gastroparesis with the patient or the sort of different level of severities?

Well, as you've heard already from my statement, it's very key to make sure we have the right target. So we do have to go through the rituals of excluding any other condition, otherwise, we never get to the finish line. So we have to make sure that appropriate studies have been done to exclude what's called obstruction or pathology in the stomach. So these patients have had an upper GI endoscopy, sometimes the radiologic testing, sometimes imaging of the abdomen, such as a CT scan. Because the patients can have some abnormal pain in addition to feeling full after a meal, not being able to finish a meal, nausea, bloating and, sometimes, vomiting. And then they have to undergo a study called a gastric emptying test. So this is a physiologic test. It can't be diagnosed by endoscopy or CT scans or ultrasounds or other techniques. One has to do a gastric emptying test where you eat a meal that's labeled with an isotope, the gold standard in the country is an eggbeater meal, 2 eggs piece of toast. So jam and water, 250 calories, 1% fat. And that's the goal standard. And one of the problems in the country is people don't adhere to the gold standard, the diagnosis is made by default, by frustration or without objective data. And that interferes with the interpretation of how treatment may work well does not work. So having defined the entity, you then have to define its etiology because depending on the etiology, your treatment has to be calibrated to the target. Probably, the 2 big ones are diabetes, probably of greater than 5 to 10 years duration, diabetes mellitus. There's 25 million diabetics in the country. And so a percent of those patients go on to get gastroparesis. And there's another group, the common group called idiopathic. Patient comes to us, and we don't know the exact reason why the nerves and muscles were damaged, and not diabetic. We assume, and sometimes they actually can identify a gastroenteritis illness, which we think is typically virally mediated illness where you have nausea, vomiting, diarrhea, restaurants, food poisoning, perhaps traveling, perhaps being involved with camping or drinking water. Some potential reason. Sometimes the patient may have forgotten the exact day in time when they had gastroenteritis. It's a common illness. Most of its bounced back and do well. But a subset, go on to have chronic nausea, bloating, fullness, can't finish a meal, vomiting. That's called idiopathic. And then the other group has had vagal nerve injury. They've had surgery on the esophagus, usually repair of a hernia, called a hiatal hernia, or heartburn, common surgery. And a small percent of those patients have damaged to their vagal nerve from the surgery. So they are the 3 big ones: diabetes, injuring the nerves and inhibition of the stomach, idiopathic viral injury to the nerves and muscle function and a vagal nerve injury, damaging the innovation of the stomach. So we do want to identify where we're going to put you because we are treating the whole patient. Gastroparesis is in the game, obviously, but we have to identify all the factors, and particularly in diabetics, glucose control is always on the table. Diabetic control often determines a lot about the prognosis of diabetic gastroparesis. So that's very important. You have to have the time and interest involved to very thoroughly evaluate the patient, and then have the gastric emptying study done. And then agree that there's no medication involved. Some people are taking narcotics, some people are smoking marijuana. Some people are taking el dopa. There are many medications, which can alter a gastric emptying study. So we have to be detectives. We have to make sure that this is not iatrogenic, this is not a man-made caused gastroparesis. So I'm not going to go through the details, but it's not as if someone just you don't just get a menu and order gastroparesis up on the menu. Gastroparesis is a diagnosis you have to work for, and you have to be 100% sure that you have the right target, or the medications and treatments will not be working.

Okay. That's a very, very [indiscernible] and very helpful. Maybe just a quick thing on this issue here, which is per -- for the gastroparesis symptom itself, is there any difference in terms of treatment per se or it's just more of consideration or other co-mobilities need to be considered?

State that question again?

Is there any major specific consideration need to be considered for treating, let's say, gastroparesis of a diabetic versus a idiopathic versus sort of nerve damaged?

Okay. Well, symptomatically, the most common symptom we asked the patient is what's called early satiety, the patient's inability to finish a standard meal that they could finish in the past or that their family is consuming. Premature fullness, premature satiety, that's a very telling symptom that we focus on, along with nausea. They're probably the biggest 3, early satiety, premature fullness and nausea. They are the big 3. And they're indistinguishable. They're the calling card to get you in the door to sort of justify that your slow stomach is symptomatic and is worthy of further intervention. Along -- as far as the different etiologies, diabetics tend to vomit a lot more than idiopathic. Diabetics -- probably because of undulations in blood sugar control tend to be a little more vulnerable to vomiting in their story, maybe once a week, maybe intermittently, some could be more frequently as they get very severe. Diabetics tend to have a potential for diffuseness. Diabetes doesn't stop at the stomach, goes into the small bowel and colon. Some of these patients may have constipation as well. Idiopathies, these patients tend to have a more propensity for pain, more complaint about being -- having a lot of discomfort, we try to make it discomfort patient really demands that we call it pain, epigastric pain. And they may be prone to pain elsewhere, fibromyalgia. May have had previous surgeries for gallbladder and hysterectomies. They tend to be more prone to pain as a higher incidence of depression, and a feeling of anxiety and mood aspects in idiopathic patients. They're all -- all these 3 entities are dominated by female. 75% of all these entities are female driven. It's probably 80% to 85% in the idiopathic subgroup. So that's probably a brief response.

Okay. Great. And at what point do you think the patient, based on the symptoms, that you need to admit them to the hospital instead of just an outpatient treatment? What level -- what type of symptoms that is worth being admitted?

Their story. Yes, Their story. Their story is that I vomit to the point where I actually go to the emergency room. So when a patient says, I'm being admitted or I go to the emergency room once a month or I may be admitted. Or the vomiting -- yes, the vomiting has brought me to that point, that may be -- they're being admitted anyway. I don't think we -- we try to admit them if we can -- if -- we don't have to, because at $3,000 or $4,000 a day in the hospital, that's not an economic idea. So diabetics get admitted because they go into what's called diabetic ketoacidosis, their diabetes gets out of control. Often, they get a urinary tract infection and the blood sugar goes above 400. It activates vomiting. So they get into the emergency room with diabetic ketoacidosis, vomiting, metabolic problems and they get admitted. Idiopathic patients more likely to come in the emergency room for dehydration. They want to get IV fluids, they may need IV anti-nausea medicine, maybe pain. They come with their own volition. We admit patients electively only when it's clear that they're having this once a month or so, every 6 weeks admission to hospital cycle. They're losing weight, and our medications have not worked. And then we do surgery. We do a procedure called placement of a gastric electrical stimulator, and cutting the pylorus, the exit of the stomach into the small bowel, called the pyloric sphincter. That's a surgery we do in about 20%, 25% of our patients who fail all medical therapies or can't tolerate or -- any medical therapies. That's the last step in the scenario. That's not something we try to maneuver, but it happens when patients cannot function. They're not working. They have no quality of life. These are signs that we've moved to the point of very severe and unless we can turn that around, you need to have surgery. Our job is not to torture patients. We have a surgery. We have a surgery that I can resurrect you. 80%, 85% of my patients have essentially have no symptoms and are functioning well after the surgery. So there comes a point in the medical therapy where you will not respond. It's not -- medical therapy is not forever. Particularly in diabetics, the disease goes on. You're a diabetic for life. It's an unforgiving entity, it burns up your nerves. And eventually, you will not respond to medical therapy. That's not default a medical therapy. It's the fact that the deck is stacked against you and you cannot overcome it. So time may run out, and you have to have surgery. Some patients, the diabetic aggression is somewhat more friendly and controllable, and you sort of stay on hold for a while. And you remain credible and remain somewhat reverse -- not reversible, but manageable. A subset -- the disease marches on, and you have to go to surgery.

Okay. Great. That's a good description of what's happening in there. And then maybe the last question about the general aspect of gastroparesis, is that what portion of your patients actually failed their original treatment and has to go to the second line therapies, so we have a better understanding in terms of the sort of treatment process or the dynamics there.

Well, we really haven't talked about treatment. So that -- the first approach is to control their nausea. So that's the main symptom as a rule, and in turn, prevent vomiting. And then so that requires an antiemetic. And at the same time, we're going to start a prokinetic. Prokinetics take time. You don't empty your stomach tomorrow morning. It may take a week or 2 to stimulate and remotivate and resurrect your stomach. Antinausea drugs work tonight. So if I want to look good tonight with my patient, I'm going to give them an antiemetic today. I may also start a prokinetic. In the case of metoclopramide and GIMOTI, we have a marriage. We have an antiemetic component in the central nervous system by blocking dopamine 2 receptors. And we have a prokinetic property in the stomach by blocking dopamine receptors. So we can do 2 things at once. We can give nausea relief which works first and then we can begin to stimulate the stomach as a prokinetic effect which works later. So we would start that therapy. In our patients as our first-line therapy, some people would also give a backup antiemetic, such as Promethazine or the 5-HT3 antagonist, ondansetron, to have a plan B to make sure that the patient is happy. Metoclopramide has about a 10% chance that in the first week or 2 you will have side effects. You'll have agitation, restlessness, what's called aesthesia, switching of muscles, [indiscernible], insomnia. These are issues that may make the patient have to reduce the dose, a, or b, may have to stop it. So that's a consideration. So you've lost, say, 10% of your patients in the first week or 2. So you may call them failed medical therapy, as far as your first-line drug [indiscernible]. Of the remainder, which you started off on maybe a modest dose, some people use milligram times a day and build up to 10 milligrams, 3 or 4 times a day slowly just because you don't want to have the patient call you with side effects that could be avoided by starting slowly. And then the patient has lost face it will confidence in the drug and we won't try it again. So we start low and build up a little bit. And then -- so in patients who started 5 milligrams, which they may by their local doctor, and don't do much better, they may call that a failure. We would not call that a failure. We would increase the dose to maybe 10 milligrams 4 times a day. And give them a couple of weeks to see where that goes. And then with GIMOTI, now we have the option of saying, look, we can guarantee continued absorption, no interference from vomiting intermittently, no interference with stomach for food or sometimes old food in the stomach, which is called basal, which sits in the stomach for days and interface of absorption, and blood level of [indiscernible] and the body. So you'd have the opportunity then to say, look, we're not going to give up on 10 milligrams 4 times a day, you're not having any side effects or minimal. Let's jump to I'm. And give you another chance to get a more sustained blood level of this drug. So you worked very hard at this because the menu was limited. The menu is 0. There's been nothing going on in this area for over 40 years. So GIMOTI is the only new addition in 40 years. It's a time capsule. You could dig it up and you'd still be very common. So you can't be frivolous. You got to make the very most of a limited menu. So you have to work very hard, it's enabling the dose. In some cases, we would use the backup ant- nausea drug. And then if they fail all those tricks, you'd have to consider other medications in this country. We only have erythromycin as an available pseudo prokinetic. It's not approved for that, but we've adopted it. It has some legitimacy, 250 to 500 milligrams, 3 or 4 times a day as a prokinetic to replace Reglan. It is not an antiemetic. Some people would then go to a drug called Prucalopride, known as Motegrity, approved by from Takeda for constipation in this country, serotonin agonist, which might have a role in the stomach yet to be proven, no data, but it has all the right stuff. You may go to that. Again, not an antiemetic. so you're using 2 drugs at once. And then finally, you may go to domperidone. If you have the wherewithal to do it, like we do, you have to get a special IND from the FDA. It's not approved in this country. Some people get it from Mexico. We get it from other pharmacies in Canada and New Zealand. And you have to have informed consent and you have to follow the patient and monitor their cardiogram. Probably 1% of gastroenterologists in this country have the ability to do that. So that's the limited repertoire that we're talking about. Of course, this is based also on changing the diet to a liquid soft diet, trying to minimize high-fiber foods, bulky foods, glucose control maximized. May have to have a co-management with a diabetologist for users who're we're already seeing one and addressing medications. Many people take tramadol or pain medicine for back pain, miscellaneous pain, that blocks gastric emptying. Some diabetics take, what's called GLP-1 analogs to lose weight and help the type 2 diabetes. Those GLP analogs slow the stomach and could sabotage your therapy. So that in a nutshell is your sort of -- that's the playing field.

Okay. That's very, very helpful. And this is a very great segue to GIMOTI, and this is just recently launched a drug and I understood -- understand that you have already prescribed the drug. So basically 2 questions here. Number one, what's your initial experience so far with the drug and maybe a follow-up here is that I understood you also have patients to get the refills. And what are the typical feedback by those patients to take to take the refills and any specific characteristics of those patients that you can sort of extrapolate from with -- at this moment.

Yes. Well, the follow-up is limited. I mean, it's certainly been -- we've only been doing this a couple of months. So we do prescribe it. We're still learning some of the tricks. We have to go through a couple of -- jump through a couple of hoops with sometimes getting it approved and through their insurance, but the company has a helpful connection, and that's made it easier. We don't call patients every day. This is not a private office. It's me and prayer and a couple of medical assistants, and we were working 24 hours a day. So we don't call patients every other day and find out how they're doing. We've not had any negative callbacks. I see patients every 2 to 3 months. So when I see them, I'll see them. But I have not had any negative callback. I assume that the drug may be working. And I think we've had -- we give a month and then we give a refill. So again, we don't call up before we refill it before the refill is up and say, are you happy, do you want to push on? So we don't have that kind of microscopic data. But I think in medicine, the general theory is hearing no negative news from patients who tend to be very vocal when it is negative, and you'll hear from them, we have assumed that things are running smoothly. And that I've given it to 4 or 5 patients, I see them back in 3 months, I'll know more, but that's about all I can say.

Okay, great. That's, again, very helpful. And Dr. McCallum, I understood that you recently published peer review articles highlighting the GIMOTI. And could you provide some insight on how should GIMOTI to be used going forward? Maybe in what sort of gastric subpopulation may be most valuable, at least initially? And so we get a better sort of overview of it.

Yes. I think we've got 2 sort of approaches here. There's the primary care doctor generally very early on, refers to the gastroenterologist. So although it's going to be marketed to the primary care doctor, it's not going to be clear how quickly they can be educated and focused. I think most primary care doctors look upon gastroparesis as being a bit beyond their radar, be on their level, and they refer to a gastroenterologist. Often, the gastroenterologist has to do the endoscopy to confirm there's no obstruction, that we do have the right diagnosis. And maybe even repeat or do the gastric emptying test in the right manner. So we're mainly talking to gastroenterologists in reality. Although the symptoms may make a primary care doctor refer the patient to a gastrologist, most primary care doctors are not in a position to get involved with referring to endoscopy and gastric emptying, they rely on GI. So most of the other doctors then are very tuned into the field. And they would probably take 2 approaches. I think in the early going here, people would probably start with some oral metoclopramide. But I think as we educate and make it clear about the benefits and advantages of GIMOTI, they would be, I think, very interested in getting a good result fairly quickly and having a happy patient clientele. And PAs and those practitioners who manage in reality, who manage these patients in practice, I mean GI doctors are too busy doing endoscopy on everyone, so their interest level in treating patients day-to-day is not that high. Nurse practitioners do most of the office work. And so we have to educate nurse practitioners as well as physicians that, yes, let's probably start off with oral metoclopramide in some cases here because metoclopramide comes in with the black cloud. When you mentioned metoclopramide to anyone in this country, there's a synaptic quivering of the eyelids or the mouth because they've been indoctrinated and brainwashed over the years that metoclopramide spells trouble. And they're not sure what it is, but they've been told, be careful. And maybe some have actually read the black box warning. So they're going to be doing it with trepidation in the beginning. So I think they start off with the oral form, maybe low dose, as I said, and go a week or 2 and the patient has no symptom, no negative side effects. And so they're believed and then they become very, I think, focused. And they would then say let's go with a full-court press here and ramp up metoclopramide and/or in short order transition to GIMOTI. In academic medicine, where we see the patients who have not done that well out there. Patients come to me because they've either failed medical therapy, they believe, or they've heard that there's other options. And it's up to me to try to establish have you really failed medical therapy or not, and do you deserve a second chance? And so I think at the academic level -- and these are patients who are thought to be moderate to severe, who come to us to be referred to us, they're not manageable by simple measures. We would probably try GIMOTI from the beginning because we want to guarantee absorption and guarantee that we get a result quickly and try to impress the patient that we know what we're doing. And we have other tricks up our sleeve. So we would go straight to GIMOTI at the more academic level. Of course, we have GI fellows being trained every day. The fellows are going to be graduating every year, and they will have learned now that GIMOTI is available. They will have seen people like me use it, and they'll be going into groups and going into practice in this country. And they will have to educate the members of their group who have been trained in the last 5 to 25 years, that there's a new kid on the block, and we need to go to it. So GI wants to get results much more quickly than primary care or practicing GI guys in town. But overall, the [indiscernible] GI guys in town learn that there's a new kid on the block that the academic guys are using it. It's being discussed at meetings, people who give the talks around the country like myself and others proposing it, are promoting it, or endorsing it. And by osmosis, the word gets out. And so medicine is about osmosis and about believing that something works because the experts use it, and it's safe. And so they will start seeing that example, start seeing that blueprint, and it will evolve. So that's the job we have is to really promote these qualities and benefits of GIMOTI, highlighting the fact that we can overcome what may be perceived as a treatment failure or suboptimal approach or not total proved, and overcome that. Knowing that we do have to work under the umbrella of a 3-month approval, and that even during that 3 months, we have to monitor for the usual culprits, the usual bad guys here, the tremor, the CNS side effects, although not reported in the clinical trials by Evoke Pharmaceutical, still on people's minds.

Okay. Great. That's very, very, very helpful. And I think we do have a bunch of questions by investors. So maybe for the next 10 minutes before we wrap up, we probably address some of the issues came from them. So Matt, would you mind -- maybe ask some of those questions?

Yes, of course. Thank you, Yale. This is Matt [indiscernible] here from Laidlaw. And again, thank you all for joining the call this afternoon, and thank you for the questions that you submitted. For the sake of time, we got over 75 questions. So we chose a handful that we found to be most relevant for Dr. McCallum to answer. With that being said, Dr. McCallum, the first question is in relation to the product effectiveness. One investor has asked how significant of the treatment differentiator is the nasal delivery of GIMOTI compared to an oral delivery metoclopramide tablet or quick dissolving tablet?

Yes. Well, the quick dissolving still has to get absorbed in the do it in. It's a nice trick for elderly patients who have dentures or trouble swallowing, but it doesn't bypass what's called the first pass liver metabolism and getting into the bloodstream. So GIMOTI has reached a new level of being able to achieve and guarantee absorption regardless of the status of the stomach, your vomiting status, your nausea level where you don't -- you feel you can't really swallow anything. So it's a major advance. And based on blood levels, we know that you get a quicker blood level, and it remains sustained. It remains sustained over the time period between doses of demote. So and achieves the sustained, if not slightly higher blood levels than the orals in a normal subject. We have not studied or there's no available data on blood levels and gastroparetics, where we assume oral metoclopramide would miserably fail. And whereas the GIMOTI would be sustained and continuous. So I don't think there's any question this is an advance in therapy. No question about that.

Okay. Second question here, is around possible other indications for GIMOTI. An investor states that metoclopramide is used in a number of indications aside from gastroparesis. Are there any additional indications besides gastroparesis where you see GIMOTI could be used?