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

Good afternoon, and welcome to Evoke Pharma's Third Quarter 2021 Earnings Conference Call and Audio webcast. With me today are Dave Gonyer, Evoke's Chief Executive Officer; and Matthew 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 third quarter that ended September 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 would now like to turn the call over to Dave Gonyer. Dave?

Thank you, Daniel, and thank you all for joining us this afternoon for Evoke Pharma's Third Quarter 2021 Earnings Conference Call. Today, I'll walk through the commercial progress of GIMOTI, including recent traction among physicians and patients. I'll also share with you exciting details from our national sales meeting that took place in late September. And lastly, I'll provide an update on our marketing and outreach programs aimed at expanding both awareness and adoption of GIMOTI before turning the call over to Chris for a comprehensive overview of our sales and marketing efforts, and then to Matt, who will review our financial results for the quarter. In the third quarter, we continued to build on our momentum commercializing GIMOTI, the first novel pharmaceutical treatment for gastroparesis in 40 years. As a reminder, GIMOTI provides a new and effective option for treating acute and recurring symptoms of diabetic gastroparesis. These patients, by definition and as noted by an FDA guidance document, have erratic absorption of oral medication, which is not optimal for patients in search of relief with pills. GIMOTI addresses the unique needs of these patients by delivering an established treatment as a nasal spray that bypasses the GI tract. We've made tremendous progress navigating through the multiple waves of the pandemic with GIMOTI. This past quarter was entirely dedicated to executing on our strategic commercial initiatives. GIMOTI sales have been gaining traction due to several contributing factors, specifically, increased in-person access to decision, which we haven't seen until recently; stronger dynamics among our sales team who came together for the first time in-person at our national sales meeting; and effective marketing campaigns, which have allowed us to expand our reach among targeted physicians and patients. As we've highlighted in previous quarters, gaining face-to-face access with physicians has been critically important and will continue to help drive our success moving forward. Above all mediums, having real-time conversations with health care professionals in-person about the important benefits of GIMOTI is by far the most effective method for getting our message across. Analysis of our own efforts to reach our targets with the detail showing that it requires only 4.6 discussions with an HCP to generate their first prescription. As a comparison, we've seen other new launches of products requiring up towards 8 to 10 meetings to a similar outcome. This key insight we shared last quarter is a strong indicator of our value proposition and a motivator for our sales team. Through increased focus, new tools and incentives, our in-person detail reach among targeted positions increased significantly in the third quarter to 56% reach versus 50% achieved over the prior 3 quarters combined. There is a direct relationship between in-person access to physicians and product sales of GIMOTI. Establishing these relationships and having ongoing dialogue with physicians has been a significant catalyst in every aspect of our business. Beyond sharing the proven clinical merit of GIMOTI, our commercial progress would not have been possible without the incredible hard work, dedication and the grit of our sales teams and, of course, the doctors and patients around the country who are ready to try alternative option to treat symptoms of gastroparesis. Launching a product with a new sales team amid the pandemic proved to be quite challenging. For instance, when it came to hiring sales reps, all interviews, subsequent training and meetings were conducted through online virtual tools. And due to the restrictions and limitations of COVID, our internal communications and interactions with the sales team, physicians and patients were largely virtual. Whether if you Zoom sales meetings or online forms such as Facebook, where patients using GIMOTI could share their experiences, there was always a barrier separating us. Not being deterred by or defeated by those barriers has become a hallmark of our team and how we operate. Now fast forward 1 year, and we're now able to finally meet in person. And in September, we hosted our first national sales meeting here in San Diego. It was the first opportunity for everyone here at Evoke, along with EVERSANA's sales and marketing teams and support management, to meet collectively live and in-person with our entire sales force. And furthermore, we were joined by a practicing gastroenterologist and one of the patients who shared their experience using GIMOTI. To help develop an even deeper appreciation and understanding of how the work we do impacts the lives of others, we invited the patient to share her powerful story of how GIMOTI has transformed her life. Her experience in dealing with diabetic gastroparesis and finally finding relief was both heart-wrenching and very inspiring. She had suffered for years with several different treatments and abdominal surgeries that did little to relieve her symptoms or improve her situation. She had spent much of 2020 in and out of the hospital with over 180 days as an in-patient. She dropped from over 200 pounds to just 67 pounds and had no energy to perform simple daily activities like work or play with her grandchildren. Beyond the debilitating symptoms, she endured the end loss of hair, teeth and suffered 2 cardiac arrests. After finding a new gastroenterologist who focused on improving her symptoms and who proactively called here when GIMOTI became available, she now reports, and I quote from her interview, "GIMOTI has changed my outlook on life. I can actually get up and I can even mingle. And I can run and play with my grandkids. I can get up and I can stay up all day. I have energy. And the biggest one of all is that I'm not in the hospital anymore. I spend all my time at home. In fact, I haven't been in the hospital for GI issues since I got on GIMOTI." She also reports, we found out, she's now up to almost 115 pounds. While this is only a single patient anecdote, the sheer genuine sense of optimism in our voice brought the full organization to understand how important our work to bring new options to treat diabetic gastroparesis truly is. Additionally, her physician, a practicing gastroenterologist, participated in the meeting as well and presented an important, relevant information about the diagnosis and treatment of patients with gastroparesis. The sales team also had access to the physician to answer questions important to their selling efforts. He noted his personal treatment regimen has undergone a paradigm shift and is now transferring almost all of his current patients on oral metoclopramide treatments to GIMOTI. Again, this example does not yet represent the majority of treating providers, but our goal is that this -- his experience and approach is soon understood by many more in the field. This meeting has also helped to improve our team working dynamics and communication. Matt, Chris and I were able to present our goals for GIMOTI and the company more effectively to the sales team. After the experience, I'm confident that every participant emerged from the meeting with a sense of unity, purpose and a shared common goal for success. And I'm convinced that this meeting was a significant catalyst, along with our marketing efforts, to help make the past -- this past month of October our best month ever. We're certainly excited about the progress we've made in the third quarter. As part of our targeting strategy, it remains critical that we closely monitor our traction among doctors and patients. An important resource, we continue to utilize this tracking our progress, specifically among physicians, has been our timely ATU studies. Our most recent study that was conducted in October measured awareness, trial and usage of GIMOTI, among health care providers. Based on this wave of the study, the data clearly indicates that awareness and adoption of GIMOTI has continued to expand, allowing us to further build GIMOTI's presence within the market. We're equally encouraged by the improvement in awareness and intent to prescribe among health care professionals who received regular visits by our sales team as well as those HCPs that are exposed to our online digital campaigns. These data reinforcing strong intent to prescribe and provide a requests for samples of GIMOTI drove our decision to begin sampling. The goal of the sampling program we introduced in August is to expand access to GIMOTI and initiate patient trial, allowing physicians and patients to experience its therapeutic benefits firsthand. This has served as an important supplement to our sales efforts and has allowed us to plant more seeds where they matter, and that's among targeted GIs who have not yet written a prescription of GIMOTI. In addition to providing physicians with samples, we encouraged them to start the patient enrollment process into our EvokeAssist program as well. We are confident the sampling program has helped support our commercial efforts. Another important contributing factor to our bump in patient enrollment has been our effective and holistic marketing efforts. In collaboration with EVERSANA's talented, engaged marketing team, we launched the Spray Away campaign and subsequent collateral aimed to drive awareness of the new treatment option for both consumers and health care providers. It will also support sales growth and improve our patient outcomes while increasing the general understanding of the treatment options. This campaign was so influential that it received an award for innovation in health care marketing. Last quarter, we launched the first wave of a vital social media campaign to reach patients directly with education about diabetic gastroparesis. The initial wave of this program consisted of 2 Facebook pages, a GIMOTI-branded Facebook page and a diabetic gastroparesis community Facebook page called DGP-n-Me, Diabetic Gastroparesis Support. Having a strong online presence in today's digital environment is absolutely imperative for reaching our target audience to raise awareness about GIMOTI. We look to continue leveraging multiple digital platforms, such as Facebook pages and the GIMOTI Rx website, to help deliver our message. I'd like to reiterate our continued commitment to improving the lives of those who suffer from symptoms of diabetic gastroparesis. Last month, Evoke Pharma and EVERSANA posted an exhibit booth at the American College of Gastroenterology 2021 Annual Scientific Meeting. This was our first opportunity to speak with health care providers at a live in-person national conference about the therapeutic benefits of GIMOTI. Attending events like this with individuals who share our common goal of improving people's lives was truly an educational and empowering experience. It's important to remember how our work impacts others and why we must keep moving the needle forward not only as a company but as a medical discipline. With that, I'd like to turn the call over to Chris for further details on our commercial progression of GIMOTI. Chris?

Thank you, Dave, and good afternoon to those of you joining us today. Evoke and EVERSANA has continued to make strong progress in commercializing GIMOTI and positioning GIMOTI as the best option to treat diabetic gastroparesis due to its unique nasal spray delivery. I'd like to emphasize that this is not [indiscernible] benefit to patients, but a fundamental solution to a complex disease which has its core defect is unpredictable [indiscernible] leading to suboptimal treatment with oral therapies. Continuing to prescribing oral medicines for these patients is not a winning strategy. By bypassing the GI tract and being directly absorbed into the circulation via the nasal mucosa, GIMOTI offers a simple yet elegant solution to relieve the current symptoms in patients with diabetic gastroparesis, which are many times debilitating as described in the patient's story that Dave shared. Every day, we hear similar moving stories from doctors and patients which inspired us to work that much harder to put the GIMOTI in the hands of people who need it most. There are countless testimonials, ranging from anecdotes from our sales reps that hear from doctors directly, and those posted by patients on -- for patients, real life examples that fuel our passion to improve the health and daily life of patients struggling with diabetic gastroparesis. They describe themselves as gastroparesis warriors and it's remarkable how they persevere with this unrelenting disease in the face of limited current options, lack of information and education, and significant under-treatment and care. They are a marginalized group of people who need and deserve support, and we intend to fill that void with GIMOTI. Let's discuss the progress we continue to make in the third quarter with our commercialization efforts. Here are some highlights before I share further details. We significantly increased reach to our target physicians, improving reach 12% in the third quarter alone to 56%. We implemented a sample program in late July, early August, which is expanding access and trial of GIMOTI. We are continuing to gain traction with our online digital and social campaign, which is continuing to increase in presence in each month since launch. We held our first live in-person national sales meeting in late September, which became our de facto launch meeting. We launched our national account manager team, and we are engaging payers with our unique value proposition. We continue to expand the number of HCPs prescribing GIMOTI and anticipating the depth of those that are prescribing GIMOTI. And lastly, we began to see life-scale conversion of oral patients to GIMOTI within select physician practices. Finally jumping into the commercial efforts. I'd like to start by sharing what we are hearing from patients who have diabetic gastroparesis and the levels. If you haven't heard the stories, I encourage you to visit any of the gastroparesis reports online to really appreciate their need and hear their voices. There are several things that repeat across platforms. Patients' symptoms are significant and incapacitating, resulting in isolation, loss of work, inability to eat and perform at normal daily functions. Patients are not controlled by therapies and are actively seeking alternatives. They're seeking advice from one another about how to deal with their nausea, vomiting and abdominal pain because current medicines are not working or not working fully. Stories about visits to the ER, hospitalizations, insertion of feeding tubes and undergrowing -- or unsuccessful surgeries to fix the problem are commonplace to most of the population. They recognize that they cannot keep their medicines down, most likely due to nausea and vomiting and resources share tests and trust to help each other manage. They are aware that they are not absorbing their medicines, and there are many stories of them vomiting up medicine hours and days after taking them. They themselves are wondering what happens if all of the medications they are taking suddenly do empty from their stomachs at the same time. They discuss options for treatment, including other options of administration, including patches, suppositories, liquids and IVs. To date, most of these discussions are about medicines for other [ symptoms ] such as depression, anxiety, migraine, diabetes to name a few. They even discuss which doctors are truly listening to them and actively working to improve their condition versus those that are dismissive and are annoying. Each of these are critical insights for both in our commercialization efforts and are supported by our own market research. We are focused on driving awareness of GIMOTI among these patients and the treatment by gastroenterologists and advanced practice providers. And we're making significant progress in reaching those targeted health care providers. In the face of the third wave of the pandemic, which lasted the entire third quarter, where the U.S. experienced nearly 70% of the peak weekly volume cases seen in May, too. We expanded our reach of 50% -- 56%, excuse me, of our targeted gastroenterologist and advanced practice providers. This represents a 12% increase in the third quarter alone. In addition, our access to our top 1,000 physicians continues to rise, topping 86%. Improved access to HCPs themselves was driven by the relationship that we built since our launch of the offices and our reliable presence we have established. We achieved access in 94% of our target offices and are creating office champions along the way. While there's still on a number of cases where we've seen some of our targets for the first time after making calls on them for an entire year, a number of these details are resulting in trial of GIMOTI and ongoing access. To illustrate this, just recently, we had a case in trials from West Virginia, where physician's now active since launch [indiscernible] finally having an expanded discussion. And the gastroenterologist decided to try GIMOTI, but indicated that he only had a handful of patients on oral metoclopramide. Further discussion with him [indiscernible] medical efforts where he discovered a greater than 60 patients on generic metoclopramide or branded Reglan. After reviewing these patients, the gastroenterologist prescribed 42 of those patients GIMOTI on the same day. This is a great example of how the pandemic has precluded adoption in new therapeutic options and that you can turn access in these situations into positive trial for patients on GIMOTI. In addition, we are continuing to expand the number of prescribers. At quarter-end, we saw 84 new subscribing physicians, and launched today, we have 383 total prescribers. The total number of prescribing physicians has written each quarter from 46 total prescribers in Q4 2020 to 182 in Q3 2021. And we are focused on continuing to build our base of new prescribers while expanding the number of patients that previous prescribers are prescribing GIMOTI. In fact, by the number of new prescribers spending, the number of prescriptions per existing prescriber is also increasing nearly 2/3 of prescriptions are coming in from those HCPs that have previously prescribed, suggesting building confidence in GIMOTI. The growth we are seeing in new prescribers is being realized at the same time as our ongoing sample program that was launched in late July of 2021. Additionally, refill rates for GIMOTI were 62% launch to date through the end of the third quarter, a slight improvement over Q2. The refill rate that we sustained and uptick in the number of prescribing physicians and prescriptions each quarter demonstrated patients using GIMOTI are experiencing improved symptom relief. Dave mentioned our sampling program. We're encouraged by the positive reception providers who received and used samples with patients. Over 3,000 samples have been dispensed since the launch of the program, with over 80% of the providers receiving samples being new to GIMOTI, meaning that they had not prescribed GIMOTI prior to the sample program. The fact that we're seeing an increase in prescribers and prescription while we are initiating samplings for the first time is an encouraging sign. Samples are disproportionately being delivered to our top best [indiscernible] physicians as well, indicating excellent execution. Importantly, going beyond the targeted gastroenterologists, we're targeting nurse practitioners and physicians for assistance to perform a significant portion of the medical treatment and follow-up for patients with diabetic gastroparesis. These samples are a month's supply and typically have a dampening effect on prescribing as physicians to use these samples to gain experience. We are actively encouraging sampling and enrolling patients simultaneously to avoid any delay in patient therapy, assuming that a patient will have a positive trial. While we implemented the sample program in late July and samples began to arrive in offices in August, we don't expect to receive a full benefit of these patient trials until mid-fourth quarter. We are also seeing more details from providers in the 3 months after sampling GIMOTI compared to the 3 months prior to samples being provided. There were 173% more details provided to HCP's samples during the post-sampling period. We're also seeing a trend in enrollments for those that have been sampled, the sample HCPs being 3x more likely to prescribe. As we continue to execute in the field of other health care providers, we continue to work on improving patient awareness through our online activities, presence and social and digital efforts. Launch to date, we have over 10 million impressions, and this continues to grow month-over-month. Our paid search and better advertising is driving significant traction to our HCP patient website. This campaign continues to outperform the industry, and this benchmarks [indiscernible] rates and efficiency of spend. Thanks to our promotional efforts, the websites for GIMOTI have received nearly 100,000 page views since launch. Our focus remains on reaching many more physicians and patients who are engaging in targeted content that convey the important therapeutic benefits of GIMOTI while translating these metrics into sales. I would like to draw particular attention to our patient support Facebook page and companion website called DGP-n-Me for diabetic gastroparesis. These are meant to fill a void in patient education and support for DGP as well as exploring alternative treatment of medical GIMOTI to relieve symptoms of DGP. We are gaining significant engagement and support of patients through these sites, which allows us to provide a community for patients that provides a forum to address these questions that patients are asking on other community sites that I mentioned previously. In addition to providing education, dietists, access to dieticians and guides to help them advocate for themselves with their providers allows us a forum to share positive HCP and patient testimonials, which are powerful tools to support patients for us. On previous calls, I shared anecdotes from providers and patients about the positive experiences with GIMOTI. These stories are growing as physicians continue to prescribe and use samples for patient trial. There are many stories like the one they shared. There was a recent story, where a patient was provided a sample in an office. The patient asked if they could try the sample right then and there, which they did. After leaving the office, the patient called back crying that they felt so good that they decided to attempt to eat the first solid meal that they had had in months and was successful in keeping that meal down. The nurse was so invested in the patient that she, too, was in tears as she immediately called our representative to share experience. We are focusing capturing these patient and provider experiences and sharing them on our website and social channels to represent promotion and peer-to-peer programs. We launched our first physician-patient testimonials with our representatives to use on calls and at the American College of Gastroenterology meeting where we [indiscernible]. Early feedback has been tremendous as HCP shared the patients' experience and [indiscernible] from the HCP how GIMOTI has changed his paradigm treating patients with DGP. This physician shared that he is currently switching patients on oral metoclopramide to GIMOTI and beginning to use GIMOTI as first line as his prescription of course for patients with diabetic gastroparesis. These messengers resonate with providers who we spoke with us at the American College of Gastroenterology or the ACG, which is the largest conference we had attended since the launch of GIMOTI. Many providers proactively sought us out and visited the booth just on the basic premise of a nasal option for patients with DGP. We had hundreds of complete discussions with providers, which resulted in a desire to try GIMOTI and request for samples. While very positive, we also learned that a number of providers were not aware of GIMOTI or aware that GIMOTI was commercially available. This is not totally unexpected, and we see that there's a tremendous upside for GIMOTI. When providers hear our story, the value proposition of GIMOTI resonates. It's just a matter of time and consistent, strong execution and GIMOTI will be successful. I am confident of that, and our leading indicators all point to that. As we look to the fourth quarter and beyond, we will continue to focus on driving awareness and trial of GIMOTI with HCP and patients. In addition, we will focus on improving our access to GIMOTI via our patient services and payment programs and physicians are working on expanding appropriate access and utilization practices through payers. They, too, have little awareness of the true burden of DGP, lack of viable treatment options and how GIMOTI can provide a significant option to patients. I'm encouraged by our current efforts and plans to first -- providers and patients an understanding of the value of GIMOTI, and I am committed to achieving commercial success. With that, I'll turn the call back over to Dave.

Great. Thanks, Chris. We're proud to see that our commercial strategy is producing results marked by an increase in organic sales from last quarter, rise in the number of prescribing physicians and sustained levels of refill rates. Furthermore, the therapeutic benefits of GIMOTI are validated in our ATU study results and in practice based on the positive testimonials of doctors and patients. Our partnership with EVERSANA is stronger than ever. We are fully committed to the success of our sales reps out of the field and gaining increased traction among physicians every day. As we now enter the final quarter of the year, we plan to charge full speed ahead and have a strong finish. Now let me turn it over to Matt to review the third quarter 2021 financials. Matt?

Thanks, Dave. Once again, thank you all for joining us this afternoon. Restating the basics of the EVERSANA grants, EVERSANA will receive reimbursement of its commercialization costs pursuant and agreed upon budgets and are only paid back to a portion of the revenue as 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 administrative costs, set at a fixed percentage of net sales and third-party royalties. During the term of our agreement with EVERSANA, they have agreed not to market, promote or sell a competing product in the United States. Now let me review our financials for the third quarter 2021 results. The net loss for the third quarter of 2021 was approximately $2 million or $0.06 per share compared to a net loss of $2.1 million or $0.08 per share for the third quarter of 2020. For the third quarter of 2021, net product sales were approximately $930,000 compared to approximately $237,000 during the second quarter of 2021. The increase in the net sales was due to both a sale to a third-party for research purposes and increase in organic GIMOTI prescriptions. FDA approved the GIMOTI NDA in June 2020 and we began commercial sales in late October 2020, so there were no comparative net product sales during the 3 months ended September 30, 2020. Research and development expenses totaled approximately $0.1 million for the third quarter of 2021 compared to approximately $0.2 million for the third quarter of 2020. For the third quarter of 2021, selling, general and administrative expenses were approximately $2.6 million compared to approximately $1.9 million for the third 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 EVERSANA the net profits obtained from the sales of GIMOTI. Total operating expenses for the third quarter of 2021 were approximately $2.8 million compared to total operating expenses of approximately $2.1 million for the same period of 2020. As of September 30, 2021, the company's cash and cash equivalents were approximately $11.1 million. We expect our cash and cash equivalents will be sufficient to fund our operations into the third quarter of 2022. We would now like to open up the call to questions. Operator?

[Operator Instructions] Your first question comes from the line of Ram Selvaraju from H.C. Wainwright.

This is Mitchell on for Ram. The first one I got here is I just wanted to -- wondered if you could talk about the total prescriber rates and how they've been trending and then how many of the initial prescribers from 3Q and 4Q of 2020 are still prescribing today.

Great question. I'll turn that over to Chris, Mitchell.

So we [ increased ] our new prescribers and total prescribers each quarter since the fourth quarter. The number of 46 to about 383 total prescribers to date. The number of prescribers have continued to prescribe is continuing to increase. I don't have the actual number of physicians that continue to prescribe. What I can tell you is the percent of prescribers that are prescribing more than once has increased significantly over the quarters to, right now, a majority of the prescribers are prescribing more than one. And we have a subset of physicians that are prescribing in multiples.

Okay. That's just helpful. And then thinking about the subscriber trends from 3Q to 2Q, the new prescribers, the slight decrease. Is that largely due to COVID or could you talk about the COVID impact versus maybe other factors there?

Yes. Thank you for that question. So I think there is still some lagging impact from COVID. You know the third wave was actually the entire third quarter. I will say that we did -- despite that increase in the third wave, we did increase our reach to physicians and that drove our performance. I think probably most of the impact is that we implemented our sampling program in the third quarter, and we have distributed now probably over 3,200 samples. Those samples are a month's supply, which is incredibly generous. And so we believe that many physicians who would try GIMOTI are trying with the samples. And so that may have caused a decrease in the number of new prescribers.

And maybe I could add on to that. One of the other aspects is that the majority of those samples in the sampling program was targeted at physicians who had not yet tried GIMOTI. So that is another rationale as to what might be dampening that first prescription in terms of natural fill versus -- they still may be trying, just not actually writing as much.

Yes, the samples are going to be an important tool for us. The access to physicians has increased. So there's 173% increase in access to those that we have sampled, that's versus pre-sampling. And then those that have been sampled are 3x more likely to prescribe. So we feel like the sampling program, although created a temporary dampening, will actually turn out to be a positive uplift for us.