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

Good day, and thank you for standing by. Welcome to the Evoke Pharma Q2 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Christine Petraglia from The Ruth Group.

Thank you. Good afternoon, and welcome to Evoke Pharma's Second Quarter 2021 Earnings Conference Call and Audio Webcast. With me today are Dave Gonyer, Evoke's Chief Executive Officer; and Matt D'Onofrio, Chief Business Officer; as well as Chris Quesenberry, GIMOTI's Chief Commercial Officer from EVERSANA. Earlier today, Evoke issued a press release announcing financial results for the second quarter that ended June 30, 2021. We encourage everyone to read today's press release as well as Evoke's quarterly report on Form 10-Q, which is filed with the SEC. The company's 10-Q report and press release are also available on Evoke's website at www.evokepharma.com. In addition, this conference call is being webcast through the company's website and will be archived for 30 days for future reference. Please note that certain information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, Evoke's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these 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 release and SEC filings included in this quarterly report on Form 10-Q and subsequent filings. This conference call contains time-sensitive information that is accurate only as the date of this live broadcast. Evoke undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that, I'd like to now turn the call over to Dave Gonyer.

Thank you, Christine, and thank you all for joining us this afternoon for Evoke Pharma's Second Quarter 2021 Earnings Conference Call. Today, I will start by walking through the commercial progress of GIMOTI, including the recent traction among physicians and patients. I will then review our new marketing and outreach programs aimed at raising awareness of GIMOTI before turning the call over to Chris for a more detailed discussion of our commercial and marketing efforts. This quarter, we continued to execute our commercial strategy for GIMOTI, the first novel pharmaceutical treatment for gastroparesis to hit the market in over 40 years. GIMOTI provides a new and effective option for treating patients that have erratic absorption of oral medications as it's the first and only outpatient non-oral treatment to treat patients suffering with diabetic gastroparesis. GIMOTI addresses the unique needs of these patients by delivering an established treatment as a nasal spray that bypasses the GI tract. In June, we secured a patent from the United States Patent and Trademark Office for GIMOTI, which covers methods of use for nasal delivery of metoclopramide for the treatment of gastroparesis. The issuance of this new patent entitled, Nasal Formulations on Metoclopramide is a testament to how innovative and novel GIMOTI is and will strengthen our intellectual property protection for GIMOTI. The new patent is listed in FDA's Orange Book and carries a patent term to at least 2029, This patent will sustain our commercialization strategy as we continue to capitalize on our novel treatment and gain further market share. GIMOTI's unique approach to answering this critically unmet medical need is not only validated by the issuance of this patent but also in practice. Since the launch of GIMOTI in October 2020, we have received overwhelmingly positive feedback from doctors and patients. The testimonials we hear from patients who had finally, found long-sought relief in treating their symptoms associated with diabetic gastroparesis are truly inspiring. In respect to our product demand and interest, we're pleased by how well received GIMOTI has been among health care providers and patients. As a result, we continue to see positive trends within the growth of the number of prescribing physicians and refill rates. Over this quarter, there were 132 new prescribing physicians, an increase of nearly 60% compared to the last quarter. The number of enrollments into our EvokeAssist program, which coordinates the reimbursement and distribution of GIMOTI, also continue to grow each month. Additionally, refill rates for GIMOTI were 61% launched to date through the end of the second quarter. And looking at active patients, patients currently on medication, the refill rate is 74%. The high refill rates and uptick in the number of prescribing physicians this quarter demonstrates that patients using GIMOTI are experiencing improved symptomatic relief. As the pandemic was abating during the second quarter, the ability of our sales team to meet face to face with physicians improved and has proven to be a tremendous advantage that we didn't have in the beginning of our commercial launch back in October and through February of this year. These visits, some of which we are seeing, high-value gastroenterologists for the first time since launch, continue to generate positive enrollments and fills. Furthermore, we have noticed a pattern within larger gastroenterology teams that the first physician adopting the use of GIMOTI has led other physicians within the same practice to begin prescribing GIMOTI as well. In addition, our sales representatives have finally been able to conduct in-person district meetings, which has helped improve team dynamics. With the easing of COVID restrictions in the second quarter and the rise in vaccinations, our management team was also able to meet with sales representatives in May. The ability to have real-time conversations with physicians and hold organization-wide meetings has significantly improved our communication around GIMOTI. We believe these sessions have been a major driving force for the increase in revenue. Net sales this quarter were approximately $237,000 and nearly a 162% increase from the previous quarter. We look forward to building on these newly established and existing relationships to further drive sales growth. With that, I'll turn it over to Chris for further details on our commercial progression of GIMOTI. Chris?

Thanks, Dave, and good afternoon, and thank you for the opportunity to share the commercial update with you today. I share Dave's positive outlook, and I'd like to emphasize some core leading indicators for the business are improving. I would like to share some top line fundamentals before I speak to them in detail. First, access to physicians increased in the second quarter as COVID cases lessened. We improved our reach to gastroenterologists and increased our details to HCPs about GIMOTI. Health care practitioners continue to provide positive direct feedback about GIMOTI. And perception of GIMOTI is high and stated interest to prescribe is significantly increasing. Gastroenterology meetings and congresses started to hold in-person meetings again, and we've been able to attend these meetings and interact live with key opinion leaders. As Dave said, we were able to hold our first live sales meetings midway through the second quarter, which was a boost to overall communication around. Our online media and social digital plan is creating a significant number of impressions and engagement. And lastly, the number of HCPs prescribing GIMOTI continues to increase, and we are implementing programs to increase trial of GIMOTI further. As sales of GIMOTI continue to ramp, we will closely monitor our traction among doctors and patients. An important resource we have utilized to track our progress, specifically among physicians, has been through timely ATU studies. Initially conducted in December of 2000, the most recent study was completed in June of this year to measure awareness, trial and product usage of GIMOTI among physicians. This next ATU study aimed at gathering further market insights on the perception of GIMOTI in the GI community. The respondent mix included 67 gastroenterologists currently being called on by the field sales force and an additional 50 GIs and primary care physicians. Our objective in the study was to understand current gastroparesis treatment landscape and to evaluate physician's perception of GIMOTI following recent brand marketing efforts. Overall, based on comparative analysis from the initial study, we observed that awareness and adoption of GIMOTI is, in fact, increasing. I'd like to share a few noteworthy findings from this study. Among 117 physicians responses, 81% of all respondents intend to prescribe GIMOTI in the future. And when you look at target GIs, 90% of them intend to prescribe GIMOTI compared to 79% in the previous study. More than twice as many respondents, 47 versus 19, reported they have written a prescription for GIMOTI in the previous 2 months compared to the previous study. Targeted GIs reported in-person visits or increasing by sales representatives. Importantly, 75% of the target GIs said they would prefer future interactions to be in person versus 64% in the previous study. And lastly, HCPs rated GIMOTI's nasal route of administration numerically higher in effectiveness at 3.63 on a 5-point scale compared to metoclopramide delivered through oral solution or oral tablet at 3.54 and 3.31, respectively. The increased traction observed in our ATU market research study will continue to reinforce GIMOTI as a viable treatment option among physicians for patients who suffer from symptoms of diabetic gastroparesis. Gastroenterologists in this study confirmed that what we are seeing in the market that our sales representatives are gaining increased face-to-face access with targeted GIs during the second quarter as compared to what we were seeing in the fourth quarter of last year to first of this year, and this is a top priority. We -- while we have successfully gained access to 90% of our targeted offices since launch, our ability to physically gain access to physicians themselves have been a significant hurdle. While we have improved this metric during the second quarter of this year with offices opening back up, we have just been able to obtain reach of 50% to our targeted physicians with the detail. We have put the most focus and effort on the top 1,000 physicians across all of our geographies, and we are seeing the best success with these physicians. Among the top HCPs, we have full access and have detailed over 80% of these physicians at least once. Not surprisingly, 2/3 of our enrollments are coming from these gastroenterology practices. On average, we have detailed these top positions 5.8x since launch or once every 6 weeks. Preliminary data suggests that it takes on average 4.6 details for an HCP to write their first enrollment for GIMOTI, which is encouraging as we are reaching this metric with our top targets. Additionally, within the pharma industry, we have typically indicated that, on average, it takes 7 to 8 details to change behavior, and it historically takes about 12 to 18 months to see an HCP that many times. I'm very pleased to see that our detail to enrollment takes less than that standard and it indicates that our message is clear and compelling. That said, since launch, access to HCP has been the challenge, and we need to expand our detail reach to our entire targeted call plan to build on this momentum. One point remains clear and has been consistent from the first day of launch. There remains a strong interest level among this group of physicians to express a genuine understanding of the potential benefits of the nasal route of administration for patients with gastroparesis and see the value of GIMOTI for their patients with diabetic gastroparesis. Habit remains our biggest obstacle, yet I am confident that when we establish a reliable presence with gastroenterologists that we can change their behavior. To that end, and in order to broaden the overall experience in utilizing GIMOTI, we launched the patient and physician experience program in July. This program will provide samples of GIMOTI to a significant number of targeted gastroenterologists and advanced practice practitioners, so they can provide these samples during an office visit and initiate therapy immediately. This is an important opportunity to familiarize non-prescribing physicians with GIMOTI and the increased trial among patients. We are hopeful that this program will allow them to observe firsthand GIMOTI's important therapeutic benefits to determine if GIMOTI may provide relief to those who do not receive maximum relief from all therapies. Our experience program is just one of the many ways we are raising awareness about GIMOTI. We are also leveraging social media to further extend our reach within the diabetic gastroparesis community, especially in today's remote environment, we understand the importance of establishing a broader online presence. As the unmet medical need for this disease remains so high with many patients continuing to seek alternatives even after a medical consultation, many of these patients turn to the Internet for their answers. Our market research indicates one of the most common venues they use are Facebook forums with tens of thousands of people interacting on these types. This quarter, we launched the first wave of our social media campaign to reach patients directly with education about diabetic gastroparesis. The initial wave of this program consists of 2 Facebook pages a GIMOTI-branded Facebook page and a diabetic gastroparesis community Facebook page called, DGP-n-Me: Diabetic Gastroparesis Support. The GIMOTI Facebook page enables us to further spread awareness of GIMOTI as an important nasal option for patients who are seeking relief of their acute and recurrent symptoms of diabetic gastroparesis, especially in cases where oral therapies are not effective. As a supplement to our GIMOTI Facebook page, we felt it was imperative and incumbent upon us as a leader in advancing medical treatments for diabetic gastroparesis to establish an online community dedicated to offering support, education and a community to people living with symptoms of diabetic gastroparesis. Since the launch of our 2 Facebook assets in mid- and late July, respectively, we have generated over 580,000 impressions and 8,000 clips to gimotirx.com from our GIMOTI Facebook page. And over 2,000 likes and reached to over 306,000 users from our DGP-n-Me Facebook page. What is most notable is the engagement we're seeing on the DGP-n-Me page. Engagement is a deeper interaction and constitutes reactions, comments and clicks. 6 image posts have received nearly 41,000 engagements and 3 of our video posts have received over 45,000 views. Currently, there are up to 16 million people in the U.S. who suffer from symptoms of gastroparesis. It is an unfortunate reality that patients with diabetic gastroparesis often suffer with these symptoms for years before receiving a confirmatory diagnosis. During this time, they often resort to the Internet for answers, and there are no consistent, readily available resources that their physicians can provide them. In a new market research study with patients with diabetic gastroparesis, more than half of the respondents indicated some level of dissatisfaction with current therapies, underscoring the opportunity with these patients. To bridge the gap, we are committed to interacting with patients to help answer questions and offer much needed support. People suffering from symptoms of gastroparesis should not be left in the dark. They deserve answers and transparency. And we look forward to playing a role in helping patients access information about what it is causing their symptoms, educational resources about the disease and available treatment options. This month, we will launch a more comprehensive website to complement our DGP-n-Me Facebook page. Also called DGP-n-Me, this page will support patients that are learning more about DGP and treatment options. They will have access to HCPs and dietitians and be able to hear from patients like them. As a reminder, these are in addition to our broader online efforts to raise awareness of DGP and GIMOTI. Since January, our total media plan drove nearly 7.5 million impressions and nearly 60,000 clips to gimotirx and gimotirxhcp.com. Both our patient and banner ads continue to perform above industry standards and are improving over time. While building awareness and market share for GIMOTI remains our key focus, we believe there are many ways to contribute to the diabetic gastroparesis community beyond our novel treatment. To that end, in June, we announced our membership into the International Foundation for Gastrointestinal Disorders. This is an important organization whose mission is aligned with ours, improving the lives of those affected by gastroparesis by raising awareness, improving education and promoting research into treatments and cures. As part of the Industry Council, we will participate in biannual council meetings and at facilitating communications that amplify the patient voice. This is a great opportunity to gain industry insight and share valuable feedback to organizations of like-minded group. One important effort that we are collaborating with the IFFGD is a survey to patients to understand the care they received during the pandemic and how that impacted their treatment in disease and the implications for future interactions with their health care providers. I look forward to sharing these insights specifically for gastroparesis in the future. Another collaboration is our support of the IFFGD and patients with gastroparesis awareness month. which is this month, August. This is an important campaign to raise awareness about the disease, the gap in care and the need for additional treatments for patients. We have a concentrated effort to leverage this effort via social channels and through our field force for the entire month. We will bring this message to HCPs directly and through our interactions at Congress meetings and peer-to-peer programs planned for late summer and through the end of the year. Lastly, we continue to gain clarity around how insurance companies are evaluating GIMOTI. Through our program, we are able to understand coverage, and when there is a request for prior authorizations and what the requirements are. To date, 58 separate plans have covered GIMOTI. Of our sales, over 70% are covered by insurance and approximately 20% are commercial patients who have received co-pay assistance. Through our continued commercial expansion, increasing in-person access to physicians and growing visibility within the gastroparesis community, we are very excited about the progress we made this last quarter. We're particularly encouraged by the positive trends observed within refill rates, sales growth and prescribing physicians. As we enter the second half of the year, we look forward to driving our commercial and marketing initiatives forward and further establishing GIMOTI as a preferred treatment option for patients suffering from diabetic gastroparesis. Our focus continues to be on increasing awareness of GIMOTI among prescribers and patients alike, positioning GIMOTI as the best choice for patients with gastroparesis based on our nasal route of administration, increasing trial of GIMOTI and improving and simplifying the access to GIMOTI. Dave?

Thanks, Chris. And as you've just heard, we've made significant progress this quarter with building awareness of GIMOTI. And thanks to the important insight from our ATU market research, we are now able to better target where our marketing and sales efforts will have the most impact. With easing COVID restrictions in the second quarter, our sales force has been able to visit doctors in person more frequently. As our sales continue to ramp, our focus remains on broadening our network among patients and doctors to further educate and increase awareness of GIMOTI's important benefits. Now let me turn it over to Matt to review the second quarter 2021 financials.

Thanks, Dave. Once again, thank you all for joining us this afternoon. Restating the basics of the EVERSANA agreement. EVERSANA will receive reimbursement of its commercialization cost pursuant to an agreed-upon budget and are only paid back through a portion of the revenue as it is recognized and received. Once those costs are covered, EVERSANA will receive a percentage of product profits in the mid- to high teens while Evoke retains over 80%. Net product profits are the net sales of GIMOTI, less reimbursed commercialization costs, Evoke manufacturing and Evoke administration costs set as a fixed percentage of net sales and third-party royalties. During the term of our agreement with EVERSANA, they have agreed not market promote or sell the competing product in the United States. Now let me review our financials for the second quarter 2021 results. The net loss for the second quarter of 2021 was approximately $2.3 million or $0.07 per share compared to a net loss of $7 million or $0.28 per share for the second quarter of 2020. During the second quarter of 2020, we expensed $5 million upon achieving a technology acquisition milestone related to FDA's approval of GIMOTI. For the second quarter of 2021, net product sales were approximately $237,000 compared to approximately $90,000 during the first quarter of 2021. The increase in net sales was due to higher number of GIMOTI prescriptions. FDA approved our GIMOTI NDA in June of 2020, and we began commercial sales in October of 2020. So there were no net product sales during the 3 months ended June 30, 2020. Research and development expenses totaled approximately $195,000 for the second quarter of 2021 compared to approximately $5.8 million for the second quarter of 2020. The decrease in research and development expenses was due to the achievement of the commercial milestone of GIMOTI receiving FDA approval in June 2020. And for the second quarter of 2021, selling and general and administrative expenses were approximately $2.1 million compared to approximately $1.2 million for the second quarter of 2020. We expect that selling, general and administrative expenses will increase in the future as we continue to progress with the commercialization of GIMOTI and reimburse for EVERSANA for the net profit obtained from the sale of GIMOTI. Total operating expenses for the second quarter of 2021 were approximately $2.4 million compared to total operating expenses of approximately $7 million for the same period of 2020. As of June 30, 2021, the company's cash and cash equivalents were approximately $16.7 million. And we expect our cash and cash equivalents will be sufficient to fund our operations into the third quarter of 2022. And with that, let me turn the call back over to Dave for closing remarks.

Great. Thanks, Matt. While we're certainly excited about the momentum we've achieved in the second quarter as we continue to observe positive trends among refill rates and prescribing physicians, with our sales representatives gaining increased face-to-face access with physicians, the positive feedback we receive inspires us to keep and put GIMOTI into the hands of the people who need it most. Looking at the second half of this year, we're confident we'll be able to capitalize on this momentum as we prioritize expanding reimbursement and access for GIMOTI to health care professionals and patients. I'd like to thank all our shareholders for the continued interest in our company and our progress. We have the right people, tools and resources in place to achieve commercial success. Together, we'll continue to work tirelessly on our mission to establish GIMOTI as the premier product in the gastroparesis market and help to improve the lives of those who suffer from this disease. We'd now like to open the call to questions from our covering analysts. Operator?

[Operator Instructions] And your first question will come from the line of Ram Selvaraju from H.C. Wainwright.

This is [ Marcus ] on for Ram. Congrats on the strong progress. Just a few from us, if I may. So you've mentioned previously that you're closely tracking the uptake of GIMOTI with nurse practitioners and physician assistance. What trends are you seeing in terms of this group?

Great. Thanks for the question. I appreciate that. I want to turn that over to Nick -- excuse me, to Chris, who's spending a lot of time on the NP and PA front. It seems to be a great group for us to tackle. So Chris?

Yes. So we're seeing increases in prescribing and unique prescribing among both gastroenterologists as well as the NPs and PAs, and it continues to increase. We're working on teasing out the NPs and PAs who actually write under the physicians authority and seeing how we can actually capture those data a little bit more clearly. But certainly, when we engage with the physicians in the offices and the NPs and PAs, it's the NPs and PAs that do the majority of the medical treatment. And so we're focused on them as a key stakeholder and more focused also on continuing to build our relationships with them. So later in September, we'll be in Las Vegas at the gastroparesis association that nurse practitioners and PAs attend. And we also will hold an ad board with those NPs and PAs at that meeting as well.

All right. Excellent. We appreciate the detailed prescriber data that you shared. Following on from previous discussions, would you still maintain -- at this point, you probably need another quarter's worth of data to be significantly confident about long-term retention rate.

Well, I think retention rate, we can see from continued prescribing physicians who have prescribed once. We're seeing some, and I'll let Chris then talk about this as well, but we've been seeing that and then seeing the refills as we mentioned as well. So the chance to get in to finally see physicians at a consistent level and face to face with them and the NPs has made a significant difference in the impact that the sales reps are having. Chris, I don't know, do you have any other comments?

Yes. So I think that we are seeing strong momentum with them in both new and continued prescribing. So the number of physicians that have written 2 or more prescriptions continues to increase, and we're focused on increasing that depth. And we have about 1/3 of our prescriptions coming from those physicians who've written 5 or more times. So that group continues to show a promise around the adoption and the clinical value that GIMOTI is providing to those patients. We have a physician, for example, in Alabama, who is switching his oral patients over to the nasal, and it's kind of a methodical process that he's taking, but that's an example where he sees the benefit in the route of administration. He's had difficulties with the oral and he sees this route of administration with GIMOTI as a better option for his patients going forward. So the goal is to get more of those physicians to understand that and really cement that value proposition.

Very helpful. And in terms of the plans reimbursing GIMOTI, are you still seeing an expansion? I think you mentioned 29 in the first quarter. Do you have the current number off the top of your head?

Yes. It's 58 plans through the second quarter, and it continues to rise this quarter. So 58 separate plans have approved at least 1 prescription for GIMOTI. Certainly, there are the larger plans and PBMs that have approved more than one. ESI and CVS are some of the plans that have the bulk of the prescriptions coming through. But we had 58 separate plans through the end of the second quarter, and I think we're around 63 or 64 midway through August.

Great. And I'll squeeze a final one, if I may. Regarding the lower dose of GIMOTI. Have you received any feedback from the FDA regarding the protocol you submitted in March of this year?

Yes, we're still working directly with FDA on to a development plan that would be appropriate for the 7.5. So we are, yes, still working with FDA in that.

Okay. And congrats to the team.