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

Good afternoon, and welcome to the Evoke Pharma's Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded. I will now turn the call over to Daniel Kontoh-Boateng. Thank you, and you may begin.

Good afternoon, and thank you for participating in Evoke Pharma's Conference Call today. With me today are David Gonyer, Evoke's Chief Executive Officer; Chris Quesenberry, GIMOTI's Chief Commercial Officer from EVERSANA; and Matthew D'Onofrio, Evoke's Chief Business Officer. By now, you should have a copy of the press release we issued earlier. If not, it is available on the Investor Relations page of our website at evokepharma.com. We encourage everyone to read today's press release as well as Evoke's annual report on Form 10-K, which is now filed with the SEC. The company's Form 10-K and earnings release are also available on Evoke's website. 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, 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 both press releases and SEC filings, including its annual report on Form 10-K and subsequent filings. This conference call contains time-sensitive information that is accurate only as of 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 David Gonyer. Dave?

Thank you, Daniel. Thanks, everyone, for joining us today. I'll start by outlining the important progress Evoke made in 2022 in meeting key strategic goals. I'll also review key events and metrics in the fourth quarter of 2022 and thus far in 2023. I'll then turn the call over to Chris and Matt, who will discuss commercial operations and financials. As I mentioned in today's release, Evoke's fiscal year 2022 was a period of significant growth and progress on several key fronts. Year-over-year revenues, new GIMOTI prescribers, prescription fills and patient enrollments, all showed substantial improvements in 2022 compared to 2021. Looking back, in 2021, we focused our attention to GIMOTI's value proposition in the marketplace. There was a clear unmet need in the market for a non-oral treatment for symptoms associated for diabetic gastroparesis, which for those who are new to the story, is the stomach paralysis caused by the nerve damage that can result from uncontrolled high blood sugars. In such cases, the stomach doesn't empty properly and food and medications may take a long time to leave the stomach and move into the intestines where they need to be absorbed. Far too many of the approximately 2 million to 3 million patients being treated with traditional oral therapeutics for this debilitating disease end up in the ER or take more invasive steps to address their symptoms, of which oral medications simply don't help improve or could have even made symptoms worse. These symptoms can include nausea, vomiting, bloating, abdominal pain, and are often accompanied by dehydration, malnutrition, and erratic blood sugars. GIMOTI is our nasal spray formulation of metoclopramide proven to be an effective medication for treating diabetic gastroparesis. GIMOTI is the only FDA-approved non-oral outpatient therapy for gastroparesis and received FDA approval in June of 2020 and then entered the market in the fourth quarter of 2020. After establishing GIMOTI's viability in the marketplace in 2021 by addressing the unmet need, in 2022, we focused on the following: first, increasing the awareness of and accessing -- and access to GIMOTI as a groundbreaking new treatment for diabetic gastroparesis among patients and their health care providers, or HCPs, and those are primarily gastroenterologists. And we did this through face-to-face educational interactions with HCPs by our commercial partner, EVERSANA, and the sales team, building channel partnerships in conjunction with EVERSANA to improve access to GIMOTI. These include vitaCare, our pharmacy partner, wholly owned by GoodRx, and also UpScriptHealth, a consumer telehealth platform, and increasing state Medicaid coverage for GIMOTI. Second, we succeeded in making progress toward our ultimate objective of having GIMOTI become the standard of care for treating diabetic gastroparesis by presenting compelling real-world data at leading medical and scientific forums. And finally, in 2022, we focused on fortifying and enhancing our intellectual property estate to deter potential generic competitors and ensure that GIMOTI is the only such product available in the market for as long as possible. And Chris will provide more detail on these areas by expanding on some specific milestones. Until GIMOTI, there has been nothing new to treat gastroparesis in over 40 years since the approval of oral metoclopramide and no pharmaceutical company voiced in the marketplace. The immense challenge that we have undertaken in upending medical consensus that has been in place for more than 4 decades simply does not happen overnight. Happily, though, we're making impressive progress in convincing the diabetic gastroparesis treatment community that GIMOTI's nasal spray metoclopramide formulation is an important and needed treatment for patients instead of current oral tablet options. To that point, GIMOTI was added to the new gastroparesis guidelines by the American College of Gastroenterology as recommended first-line therapy. This is a very important milestone for GIMOTI and Evoke. In September of last year, we announced that GIMOTI was nominated for Healio's Annual Disruptive Innovators Award under their Industry Breakthrough category. GIMOTI was selected among other novel gastroenterology products from major pharmaceutical companies. Healio is an online source for in-depth specialty clinical information and offers wide industry accepted news. The Disruptive Innovators Award hosted by Healio is an annual event to honor the trailblazers, movers and industry personnel that are creating a difference in the field of gastroenterology. And as a nominee for the award, GIMOTI was recognized for its role in changing the face of gastroenterology and shifting the status quo towards a betterment of the field. In May 2022, Evoke participated at DDW, or Digestive Disease Week, which is the largest global conference for gastroenterology, and we were pleased to present a Poster of Distinction to the scientific and clinical experts and key opinion leaders from around the world. The study provided real-world statistics using the largest claims database available, which covers over 80 million lives in the U.S. to assess the incidence of tardive dyskinesia, or TD, for patients taking metoclopramide over a 10-year period. Results for patients that had received metoclopramide demonstrated a lower risk of developing TD than stated in previously reported studies. The data revealed an incidence of TD among gastroparesis treated -- gastroparesis patients treated with metoclopramide of just 0.1%. The poster data supports the safety profile of metoclopramide. And the aim of the study was to update the medical literature with current information about the incidence of TD in patients with and without gastroparesis and those taking metoclopramide. By supporting the largest ever real-world study on the important issue -- this important issue, we hope to help HCPs and organizations understand the incidence of TD, recognize patients who might be at higher risk and revisit the benefit versus the risk of this important compound in patients with gastroparesis. In addition to the new ACG guidelines and GIMOTI's first-line recommendations, 2 recent announcements also reveal how we're chipping away at the medical consensus I mentioned earlier. In January of this year, we announced that another study will be presented as an abstract at the Academy of Managed Care Pharmacy, or AMCP, annual meeting taking place this week in San Antonio. The abstract entitled Real-World Health care Resource Utilization of Patients Treated with Metoclopramide Nasal for Diabetic Gastroparesis is a study of nearly 300 patients using GIMOTI, that revealed a reduced need to visit the ER or take more invasive steps to treat their condition. These results have been extremely well received with key opinion leaders. Last month, together with EVERSANA, we reported that yet another abstract was not only accepted but selected for the plenary lecture presentation at the upcoming Digestive Disease Week in Chicago from May 6 to May 9. This abstract entitled Reducing Real-World Health Care Resource Utilization For Patients with Diabetic Gastroparesis Treated with Metoclopramide Nasal Spray Versus Oral Metoclopramide provides compelling health care resource utilization data on the effectiveness of GIMOTI as a potentially needle-moving solution in the treatment of gastroparesis. For the remainder of 2023 and beyond, we'll continue our strategy of highlighting the benefits of GIMOTI at important medical meetings and continue to generate new data. Next, as I referred to earlier, fortifying and enhancing Evoke's intellectual property estate is a vital component of our strategy to make GIMOTI brand synonymous with the new treatment paradigm for diabetic gastroparesis. A prime example is the recent successful litigation against generic pharma giant, Teva Pharmaceuticals. Last year, we received a Paragraph IV certification notice letter from Teva. This notice indicated that Teva has submitted an Abbreviated New Drug Application, or ANDA, to FDA seeking approval to manufacture and sell a generic version of GIMOTI, prior to the expiration of certain Orange Book-listed patents protecting GIMOTI. We initiated a patent infringement lawsuit against Teva and vigorously defended our intellectual property rights protecting the product. And as a result, Teva withdrew its Paragraph IV for its generic ANDA and will not pursue approval until GIMOTI's last Orange Book-listed patent expires. This is currently 2030 but may be extended pending other filed patents. In addition, no further ANDA filer will be eligible to receive 180-day generic exclusivity for an ANDA that references GIMOTI. This first-to-file regulatory path is typically highly sought after by generic firms. Consequently, this matter has ended, and we believe the successful outcome reflects the strength of our intellectual property. And furthermore, it strengthens our resolve to defend our rights, particularly against larger, well-resourced companies. During 2022, we also bolstered GIMOTI's intellectual property estate with key milestones I'll briefly summarize. In December, USPTO issued Evoke a patent under the title, Treatment of Moderate and Severe Gastroparesis. This patent expires in 2038 and covers the methods for treating moderate-to-severe gastroparesis with metoclopramide via the intranasal route of administration. The grant of this patent confirms that we -- what we observed in our Phase III trial results from utilizing nasal metoclopramide to treat patients suffering from moderate-to-severe gastroparesis. In November, the USPTO issued a notice of allowance for a patent application entitled Nasal Formulations of Metoclopramide, which would expire in December 2029. This patent application is a continuation of several other U.S. patents filed by the company over the last decade. And in July, the Canadian Intellectual Property Office granted Evoke a key patent for a previously submitted application entitled Nasal Formulations of Metoclopramide. This patent corresponds to the 2 other FDA Orange Book-listed patents under the same title that expire in 2029 and 2030. The patent covers the methods of use of nasal delivery in metoclopramide for treating diabetic gastroparesis. This Canadian patent expires in 2029 and provides patent protection in another potential market for our novel gastroparesis treatment. We're pleased with the progress we made in 2022 and thus far in 2023 to further establish our proprietary concept of delivering effective medication through the nasal pathway to treat symptoms associated with diabetic gastroparesis. We are eager to further our goal to capitalize on this large and growing market opportunity in the U.S. and abroad. Our intellectual property portfolio now includes FDA Orange Book-listed patents and other patents in the EU, Japan, Canada and Mexico. Before turning the call over to Chris, I want to provide a little color on the fourth quarter 2022 financial and operating results. And Matt will take us through key components of our financials for the quarter and the year as well. As mentioned in today's press release, the fourth quarter saw a slight $36,000 decrease in our net product sales in the third quarter, even though we had an 8% increase in GIMOTI prescription fills. The reason for this decline after 3 quarters of sequential revenue growth in 2022 is straightforward. First, Q4 has more holidays and fewer working days than Q3. Those holidays coincide with the end of the month, which tend to be our stronger weeks, and there were also pharmacy closures due to weather events during that time. And lastly, we experienced a slightly higher number of prescriptions provided to uninsured or underinsured patients. In such circumstances, it Evoke's practice to offer GIMOTI at a discount to those patients in urgent need of gastroparesis symptom relief. We expect to return to positive sequential revenue growth in 2023 as the sales mix returns to levels we saw in the first 3 quarters of 2022. Finally, the number of cumulative GIMOTI prescribers increased by approximately 25% to 1,017 HCPs at December 31, 2022, from 812 through December 31, 2021. This metric continues to increase, reaching 205 prescribers at the end of January of this year, the highest month on record. And finally, as I mentioned, prescription fills in the fourth quarter of 2022 increased by 8% compared to the previous quarter. Prescription fills for all of 2022 increased by 178% compared to 2021. With that, I'll turn the call over to Chris.

Thank you, Dave. 2022 was a year of tremendous progress for Evoke, GIMOTI, and EVERSANA. I'd like to add my support to what Dave described as last year's significant progress in physician awareness and patient access to GIMOTI, as a needed solution for relief of diabetic gastroparesis symptoms. Our Evoke team within EVERSANA and in the field as well as our partners at vitaCare and UpScriptHealth continues to execute our strategy to make GIMOTI the standard of care for patients suffering with diabetic gastroparesis and to improve access to GIMOTI for appropriate patients. It has not been without challenges at many turns. Yet our team remains focused and is steadfast to alter the clinical inertia and habit that has been status quo in this market. Patients deserve better. Broadening and deepening health care practitioner trial and adoption of GIMOTI was and will continue to remain our priority focus, and we have made steady progress. Q4 by many metrics was our best ever. We nearly doubled our new prescribers in 2022, growing 96%. In the fourth quarter alone, we increased new prescribers 43% over Q3 and our total cumulative new prescribers continued to expand to 1,017. Repeat prescribers grew 774% in 2022 versus '21. And in Q4, we expanded our Q3 total by 14%. As prescribers grew, so did expenses at 8% improvement over Q3. Full year dispensed growth was 178% versus 2021. We continue to see excellent continuation by our patients with a 79% refill rate for those that have scripts remaining on their treatment. Lastly, refills for GIMOTI is a metric we are closely watching. Refills grew 34% in Q4 compared to Q3 and 219% year-over-year. The primary driver of performance in Q4 and in 2022 was interactions with health care providers. Face-to-face interactions in the post-COVID era continues to be the most important lever. We see a pattern emerging where when a health care provider in a practice prescribes GIMOTI, and has a positive experience, they tend to prescribe more, and those that are in the practice with them begin to adopt GIMOTI as well. It is evidence that our total practice approach is paying dividends. In addition, we conducted peer-to-peer educational programs last year. Those programs reached 673 total attendees where the rationale and benefits of GIMOTI were discussed including relevant patient case experience. These programs increase the knowledge of our audience, and we saw a significant impact on prescribing, increasing 44% from prior to attending a program. We plan to double our programming this year to reach a broader audience. To further combat status quo thinking, we leveraged the publication of the updated ACG guidelines for gastroparesis by producing our own summary of the guidelines and highlighting the positioning of GIMOTI and oral metoclopramide as first-line pharmacotherapy. This has generated significant conversations and added credibility to our messaging. We also continue to conduct patient market research to track their awareness, trial and utilization patterns. Our last wave confirms feedback we are hearing from providers and demonstrated that roughly 50% of users do not see any symptom improvement from existing oral treatment options, whether they're liquid or tablet forms. 38% of respondents discontinued their gastroparesis medications, primarily due to either side effects or lack of symptom improvement. Of those respondents who are aware of GIMOTI prior to the survey, 43% are current users. And 100% of those current GIMOTI users reported seeing at least some symptom improvement, with diminished nausea being the most cited symptom improvement. Finally, patients rated GIMOTI as more favorable than competing treatments on all attributes related to tolerability and efficacy compared to other treatments. We are encouraged by these results, and yet we recognize there is still a significant gap in conversations between patients and providers around whether current therapies are working, what alternative treatments are available and how these treatments differ. Another contributor to the success in 2022 was changing our distribution approach. May of last year, after a 4-month pilot, we switched distribution to vitaCare Prescription Services. The switch to vitaCare significantly improved prescribing of GIMOTI, allowing HCPs to e-prescribe GIMOTI directly. Additionally, we saw the time from the submission of prescription to the delivery of GIMOTI to a patient's home, what we call speed to therapy improved. Reliable access to GIMOTI, especially with a low out-of-pocket expense for patients, is a primary driver for their initial and ongoing use. When patients get access to GIMOTI, we see and hear positive feedback. With the vitaCare process, our refill rates have continued to improve and is at 79%, the highest we've seen since [ launch ]. Another opportunity for GIMOTI is coverage by insurance plan. We continue to build on our success and access with 110 payers approving at least 1 Rx since launch. In Q4, 69% of dispenses were covered by either commercial or government insurance and that is relatively stable from prior quarters. We are committed to expanding access to GIMOTI. Part of that commitment comes in continuing to build on the value proposition for GIMOTI and to demonstrate further evidence. Dave outlined 2 important new studies that we have recently submitted to medical congresses, which have both been accepted. These studies leverage our exclusive pharmacy data for GIMOTI patients and link it compliantly to claims database, which allows us to understand the utilization of health care resources such as physician office visits, hospital outpatient visits, hospital inpatient visits and emergency visits. These real-world data complement clinical trial data, which affirm the safety and efficacy of a product in a controlled setting and go beyond that to examine the impact of treatment on various stakeholders like providers, patients and payers, very clinical and diverse demographic segments. Now prior to commenting on the new studies, the previous tardive dyskinesia study we conducted, which was presented at last year's Digestive Disease Week, remains an important clinical update for physicians to be aware of with the use of metoclopramide, whereas various prior small studies published decades ago noticed an incidence rate of 10% or higher with TD for metoclopramide. This groundbreaking analysis examining claims data across 80 million patients in the U.S. showed a much lower incidence at 0.1% of all gastroparesis patients taking metoclopramide over the 10-year survey. These data have received significant attention at several large congresses, helping physicians and patients to understand and assess risk benefit for use of metoclopramide with the updated information. We plan to submit these data on the incidence of tardive dyskinesia in patients with gastroparesis for publication shortly. The upcoming AMCP study explored the utilization of health care resources of 294 patients 6 months before and 6 months after initiation of GIMOTI. The study showed patients starting GIMOTI demonstrated fewer all-cause and diabetic gastroparesis related health care resource utilization for office, ER, inpatient and outpatient visits for the 6-month intervals following initiation of treatment, achieving statistical significance for the diabetic gastroparesis related physician office visits and hospital outcome visits and a numerical improvement for emergency visits. For all cause-related HRU, there was a statistically significant reduction in physician office visits. It's important to note that about half these patients tracked were on oral metoclopramide for a mean duration of 8.1 months prior to switching to GIMOTI. The scientific poster for AMCP should be available on the Evoke Pharma corporate website in the coming days. In the next study to be delivered at the plenary session for Digestive Disease Week, 257 patients on GIMOTI were compared to a match control of 257 patients with documented utilization of oral metoclopramide over 6 months in parallel. These data will provide insight to the question, how does GIMOTI compare to the standard of care for gastroparesis in a real world setting? These data are really important to understand as studies suggest that patients with diabetic gastroparesis are admitted to the hospital an average of 4x a year and 30% of them are having to be readmitted within 30 days. Cost of the health care system is significant and the impact on patients and their families is considerable. We are excited to share these first-in-class data and believe they will add important new information for patients, providers and payers alike. In summary, I'd like to reinforce we are making positive strides in improving adoption and performance of GIMOTI. By many measures, Q4 was our best quarter to date. We have tackled barriers and continue to address them proactively and with urgency. We continue to invest value-generating areas and believe those will bear fruit in 2023. Our goal remains to position GIMOTI as the standard of care for patients with diabetic gastroparesis. This year, we'll be focused on building on the confidence in GIMOTI, and in the programs and services surrounding term. If we're going to change the status quo and confidence in the currency with which we have to deal with. With that, let me turn the call over to Matt to discuss financials.

Thanks, Chris. Let's turn quickly to financials. As Dave mentioned, for the fourth quarter of 2022, net product sales were approximately $796,000 compared with $361,000 during the fourth quarter of 2021 and the net loss was approximately $1.8 million or $0.54 per share compared with $1.7 million or $0.61 per share for the fourth quarter of 2021. For the year ended December 31, 2022, net product sales were approximately $2.5 million compared with the approximately $1.6 million for the year ended December 31, 2021, and the net loss was approximately $8.5 million or $2.62 per share compared with a net loss of $8.5 million or $3.18 per share for the year ended December 31, 2021. And the annual net losses per share reflect the company's June 2022 1-for-12 reverse stock split. The year-over-year increase in revenue was due to higher net product sales in 2022, resulting from increased face-to-face interactions with physicians, primarily gastroenterologists, and other health care providers with our sales partner, EVERSANA. Greater numbers of physicians within larger groups prescribing GIMOTI, after the first physician adoption, and more increased sales through our vitaCare Prescription Services partner. Research and development expenses totaled $27,000 for the fourth quarter of 2022 compared with $36,000 for the fourth quarter of 2021. And for the full year of 2022, research and development expenses were approximately $0.3 million compared with approximately $0.6 million for the prior year. Since receiving FDA approval of GIMOTI in June of 2020, Evoke's research and development costs continued to decrease and shift to commercialization and selling costs. For the fourth quarter of 2022, selling, general and administrative expenses were approximately $2.3 million compared with $1.7 million for the fourth quarter of 2021. For the year ended December 31, 2022, selling, general and administrative expenses were approximately $9.6 million versus approximately $8.9 million for the year ended December 31, 2021. The increase in SG&A costs year-over-year resulted primarily from shifting personnel costs from research and development to commercialization costs, along with higher marketing royalty and EVERSANA profit sharing costs. We expect that selling, general and administrative expenses will increase in the future as we continue to progress with commercialization of GIMOTI and we reimbursed EVERSANA from the net profits obtained from the sales of GIMOTI. Total operating expenses for the fourth quarter of 2022 were approximately $2.3 million compared with $1.8 million for the same period of 2021. And for the year ended December 31, 2022, total operating expenses were approximately $10.3 million compared with approximately $9.8 million for the full year of 2021. As of December 31, 2022, cash and cash equivalents were approximately $9.8 million. We believe based on our current operating plan that our existing cash and cash equivalents as well as future cash flows from net product sales of GIMOTI will be sufficient to fund our operations at least in the third quarter of 2023. And finally, Evoke currently holds the majority of its cash at Pacific Western Bank within the ISC or insured cash sweep accounts. These accounts move funds into separate FDIC insured accounts of up to $250,000 each per day and is available as needed. And with that, we'll open up the call to questions. Operator?

[Operator Instructions] And we'll take our first question from Yale Jen with Laidlaw Company.

And congrats on the quarters. A couple from us. The first one is that you mentioned that for the fourth quarter you have more under and uninsured patients. And what do you -- you anticipate that to reduce in 2023? Was there any signs to suggest that of the first 3 months of this year?

Thanks, Yale, for the question. No. So far, in this first quarter, we had -- we saw a little maybe trickle in January, but since then, we haven't.

And Yale, this is Matt. I don't think there's any predictive quantities around it other than, as you know, sometimes around year-end and the beginning of the year, changes in plans and other things can cause hiccups around reimbursement for individuals as they move from one insurer to another. So I think there's maybe a very slight seasonal effect that you can see in the end of the year kind of time frame, but nothing otherwise.

Okay. The second question is that -- maybe related, which is cost of goods for the fourth quarter, again, is substantially higher than the previous 3 quarters. What have caused that? And do you anticipate this cost of goods ratio to continue for the 2023?