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Based in San Diego, CA, Evoke Pharma (NASDAQ:EVOK) scheduled a $27 million IPO with a market capitalization of $75 million at a price range mid-point of $13, for Wednesday, September 25, 2013.

Twelve IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

S-1 filed August 30, 2013
Manager, Joint Managers: Aegis Capital Corp
Co-Managers: Cantor Fitzgerald; Feltl

Summary

EVOK is a specialty pharmaceutical company focused primarily on the development of drugs to treat gastrointestinal, or GI, disorders and diseases.

EVOK has no collaboration partner and has generated no sales, but has completed a Phase 2 trial with favorable results

Valuation

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing June 6 mos '13

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Evoke Pharma

$75

n/a

-51.6

3.5

3.5

36%


Accumulated deficit of -$21 million.

Conclusion

The rating on EVOK is neutral to avoid.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business

EVOK is a specialty pharmaceutical company focused primarily on the development of drugs to treat gastrointestinal, or GI, disorders and diseases.

The company is developing EVK-001, a metoclopramide nasal spray for the relief of symptoms associated with acute and recurrent diabetic gastroparesis in women with diabetes mellitus. Diabetic gastroparesis is a GI disorder afflicting millions of sufferers worldwide, in which the stomach takes too long to empty its contents resulting in serious digestive system symptoms.

Metoclopramide is the only product currently approved in the United States to treat gastroparesis, and is currently available only in oral and intravenous forms.

EVOK's lead product - EVK-001 - is a novel formulation of this drug designed to provide systemic delivery of metoclopramide through intranasal administration.

Clinical trials

EVOK has evaluated EVK-001 in a multicenter, randomized, double-blind, placebo-controlled parallel group, dose-ranging Phase 2b clinical trial in 287 patients with diabetic gastroparesis where EVK-001 was observed to be effective in improving the most prevalent and clinically relevant symptoms associated with gastroparesis in women while exhibiting a favorable safety profile.

EVOK plans to initiate a Phase 3 trial of EVK-001 in female patients with symptoms associated with acute and recurrent diabetic gastroparesis in the first half of 2014.

Lead product candidate
EVK-001: Metoclopramide Nasal Spray

EVOK believes intranasal administration has the potential to offer target gastroparesis patients a preferred treatment option. Unlike oral metoclopramide, EVK-001 is designed to effectively bypass the digestive system and allow for more predictable drug administration of EVOK's proprietary nasal spray formulation across the thin mucosa in the nasal cavity.

Intranasal drug delivery effectively bypasses the gut, unlike oral formulations which might be delayed in absorption due to gastroparesis itself. For patients suffering from nausea and vomiting, EVK-001 is designed to allow for rapid and predictable drug administration.

EVOK has evaluated EVK-001 in a multicenter, randomized, double-blind, placebo-controlled parallel group, dose-ranging Phase 2b clinical trial in 287 patients with diabetic gastroparesis where EVK-001 was observed to be effective in improving the most prevalent and clinically relevant symptoms associated with gastroparesis in women while exhibiting a favorable safety profile.

EVOK plans to initiate a Phase 3 trial of EVK-001 in female patients with symptoms associated with acute and recurrent diabetic gastroparesis in the first half of 2014. The company anticipates receiving topline data from this trial in early 2015. EVOK will need to successfully complete this trial, as well as a thorough QT study, which is an evaluation of cardiac safety, before submitting a new drug application, or NDA, to the U.S. Food and Drug Administration, or FDA, for EVK-001.

Risks

EVOK faces an inherent risk of product liability as a result of the clinical testing of EVK-001 and will face an even greater risk if it commercializes the product candidate.

In particular, products containing metoclopramide have been reported to cause side effects, including TD. It is possible that a patient taking EVK-001 will be found to experience a variety of side effects.

In 2009, the FDA required a boxed warning on all metoclopramide product labels concerning the chance of TD for patients taking these products. EVOK expects that the label for EVK-001, if approved, will likely contain a similar warning regarding TD. Several manufactures of metoclopramide products have been sued by patients regarding TD.

Competition

EVOK expects that, if approved, EVK-001 will compete directly with metoclopramide oral, erythromycin and domperidone as a treatment for gastroparesis. Metoclopramide is the only product currently approved in the United States to treat gastroparesis. Metoclopramide is available from a number of generic pharmaceutical manufacturers as well in branded form in the United States under the tradename Reglan from Ani Pharmaceuticals.

Previously, Propulsid (cisapride) and Zelnorm (tegaserod) were prescribed off-label by physicians to treat gastroparesis. Propulsid (cisapride) was approved for use in the treatment of dyspepsia and GERD. Zelnorm (tegaserod) was approved for use in IBS and idiopathic chronic constipation. Both of these products have been withdrawn from the market because of cardiac safety issues.

Salix Pharmaceuticals launched an orally dissolving tablet formulation of metoclopramide in 2009. Other programs in the gastroparesis pipeline include new chemical entities in earlier-stage clinical trials. In addition to the EVK-001 product candidate, there are three other development candidates. All are in Phase 2 clinical development.

Patent portfolio

U.S. Patent 6,770,262-Nasal Administration of Agents for the Treatment of Gastroparesis. This patent expires in 2021.

U.S. Patent 5,760,086-Nasal Administration for the Treatment of Delayed Onset Emesis. This patent expires in 2016.

U.S. Patent 8,334,281-Nasal Formulations of Metoclopramide. This patent expires in 2030.

Non-Provisional Patent Application No. PCT/US2012/052096-Treatment of Symptoms of Associated with Female Gastroparesis. If granted, this patent would expire in 2032.

The company also been granted patents in the European Union for the method of use of metoclopramide via nasal delivery for gastroparesis. These patents provide protection through 2021. The company also received patents in the European Union covering the intranasal use of metoclopramide for delayed onset emesis. These patents offer protection through 2016.

5% stockholders pre-IPO

Funds affiliated with Domain Associates, L.L.C., 31%
Funds affiliated with LVP GP III, LLC, 31%

Use of proceeds

EVOK expects to net $23.8 million from its IPO.

Proceeds are allocated as follows:

$15.0 million for research and development activities for EVK-001, including a planned Phase 3 clinical trial of EVK-001. $2.1 million to make monthly principal and interest payments on a loan with Silicon Valley Bank. Advances under the loan and security agreement have an interest-only period through December 31, 2013, and a 24-month payback period beginning January 2014.

The remaining proceeds are for working capital and other general corporate purposes.

Disclaimer: This EVOK IPO report is based on a reading and analysis of EVOK's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Evoke Pharma