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Bio Bull
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I have been occasionally investing, as my personal time and money permit, via long positions over the course of 10 years. I don't work for a brokerage firm, and I'm not a professional trader. My interest has been predominantly within the biotechnology and energy sectors. I'm a CPA licensed in... More
  • Evoke Pharma (EVOK) Article Coming Soon To Seeking Alpha! 10 comments
    Jan 7, 2014 3:36 PM | about stocks: EVOK

    Hopefully everyone has a chance to read my Neuralstem article published on Seeking Alpha earlier today. I'm putting the finishing touches on my in-depth article for a company called Evoke Pharma which is one of my favorite stocks in 2014. I'll provide some highlights.

    Evoke Pharma (NASDAQ:EVOK) went public in September 2013 at $12 per share. Since the IPO, the share price has ranged from $6.75 to $14.25. The current share price is $8 which seems to be a resistance point at which the stock generally stays around. In general, in the past month and a half, the share price has slid due to low volume and lack of coverage. Part of the problem is that the Phase 2B was completed pre-IPO and thus many investors are simply unaware of Evoke.

    Evoke has a low float. There are approximately 6.1 million shares in total, and 6.8 million fully diluted, but only 2.4 million shares are freely tradeable without restriction. This means shares are likely to rise, fast, during 2014 as investors accumulate shares and Phase 3 launches which is expected to occur soon.

    Evoke is aiming to treat a condition in women known as diabetic gastroparesis in which a patient's stomach has difficulty properly emptying food which can lead to feeling bloated, feelings of pain, and vomiting. Only one product is approved by the FDA currently, oral and intravenous forms of metoclopramide. Evoke is relatively safe for a biotech because their product is simple... they are developing a nasal version of metoclopramide to treat the very same condition! Metoclopramide has been proven effective in treating diabetic gastroparesis. The Phase 2B produced very positive results. Evoke need only complete the Phase 3 study and a QT study to show no cardiac effects (which metoclopramide is not known to have) in order to seek FDA approval which seems highly likely.

    Why a nasal version of metoclopramide? Evoke believes the health community is aware of the problem of using oral medications to treat a patient that has problems with the stomach. For example, if symptoms often involve vomiting, the patient may vomit out the oral metoclopramide and not receive relief of their diabetic gastroparesis symptoms.

    Evoke has price targets of $19 and $60. Annual sales are projected at $230 million by one analyst and $400 million by another analyst. Even at the lowest projection, if they were to sell the company during 2014 at the price of only one year of projected sales ($230 million), the share price could potentially quadruple.

    I have further details captured in my article but hopefully this gives you a sense of the opportunity that I believe exists for Evoke Pharma. You can learn more about them by checking their website below:

    I've nearly completed the article. I anticipate it being published sometime on Monday (1/13) or Tuesday of next week which also happens to be when Evoke will be presenting at a biotech conference in San Francisco. If Evoke successfully demonstrates how large their potential market is and why it should easily succeed, shares may benefit. In concluding, Evoke appears to be a single trial away from FDA approval, with little risk of trial failure, and it should be able to generate a large gain from the current share price as 2014 progresses.

    Thanks all!

    Disclosure: I am long EVOK, .

    Stocks: EVOK
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Comments (10)
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  • profit698
    , contributor
    Comments (56) | Send Message
    Thanks for your sharing! How about their cash postion and associated share diluation?
    7 Jan 2014, 08:57 PM Reply Like
  • Bio Bull
    , contributor
    Comments (252) | Send Message
    Author’s reply » Fully diluted, they would only have 6.8 million shares!


    They have cash of $24 million on hand from the IPO and anticipate needing $15 million to complete the Phase 3 trial, QT study, and an optional trial in men which is purely to support the safety profile. Cantor Fitzgerald anticipates they are funded through Phase 3 which I agree with. If they need to bring the product to market, they would need cash, but I anticipate Evoke will sell rights to EVK-001 prior to submission of the NDA.
    7 Jan 2014, 09:32 PM Reply Like
  • profit698
    , contributor
    Comments (56) | Send Message
    Great! You're awesome, Red Bull!
    7 Jan 2014, 10:40 PM Reply Like
  • 14195192
    , contributor
    Comments (85) | Send Message
    Thanks for your work. I used to work at same company that the CEO worked at (Goyner). He has experience in commercializations and done it several times. Why do you feel they will sell?


    Why not bring product to market? I also find it interesting that they acquired product from Questcore. I know Goyner has relationships with the original guys who went there. I wonder why though qcor didn't attempt to bring this product forward. They sold it for hardly anything $650000 plus royalties and milestone payments. At the time qcor had nothing


    My concern is share price keeps going down until people start to see value. Where do u see the floor?


    8 Jan 2014, 07:42 PM Reply Like
  • Bio Bull
    , contributor
    Comments (252) | Send Message
    Author’s reply » Great comments 141. Which company did you work with Goyner at? I've actually written about him a bit in my article. He did serve as Director of Marketing at Dura Pharmaceuticals. The reason I believe they will sell is actually another founder, Cam Garner, a venture capitalist who has a history of starting and selling biotech companies. He likes specialty pharmas that are "not sexy" such as Elevation Pharma which he sold for a nice gain. You can read more about him below. He stated he has a "short attention span." I will say that even if they went at it alone, I believe it could be a very profitable company... just that it would require a stock offering to fund it. The company has no sales force though so selling to a company with a marketing arm once the drug is ready to be approved would make a lot of sense too.



    I can't say with certainty why Questcor sold, but they seemed to have a preference to license it out to different entities based on marketing region. Questcor will ultimately get much more than $650,000 though. I discuss it more in the article but payments could ultimately come to $50 million. Questcor may have been focused on developing more core drugs at the time which they deemed to have a larger market vs. a drug that gets $200-$300 million per year "only."


    Hopefully this article helps to get the word out about Evoke. Also, they are presenting next week which could help along with the news of the Phase 3 initiation very soon. The stock seems to hover around the $8 mark. Even though it went down to $6.75, it went back toward $8 again. Relative to so many risky, early-stage drugs, EVK-001 is a safe bet and this should ultimately drive the share price up. Some of their outstanding warrants have a strike price in the $20's too which to me is a sign that appreciation is expected at some point.
    8 Jan 2014, 11:03 PM Reply Like
  • 14195192
    , contributor
    Comments (85) | Send Message
    I worked with Dave at Xcel and remember that Cam was also the money behind it as well. I bring up Qcor because these guys are all interconnected. Many of Xcel went to work there after Valeant bought Xcel out. Including Dave so perhaps he found out about product and leveraged his relationship to spin it off into evoke?


    So you are correct on your selling trend by Cam. I also think though that they may attempt to commercialize as Dave has this experience. From what I remember Dave was a good guy (liked to surf) seemed like he knew what he was doing.


    There was so little stock traded yesterday. You are correct that no one knows about it so any news can shoot up the price. I just wonder why pull the trigger now, why not wait 6 months?
    9 Jan 2014, 08:21 AM Reply Like
  • Bio Bull
    , contributor
    Comments (252) | Send Message
    Author’s reply » It is possible it could be a good buy 6 months from now but Evoke is starting to present at conferences now and the Phase 3 initiation may put it on the radar of investors who weren't aware of it before. If Phase 3 kicks off next month, that could help bring out new investors.


    I also think a 3rd analyst involved in the offering may initiate coverage with a Buy as the other two have done.


    In all, I know this price is pretty good relative to market potential. If you're holding for a year, I believe there could be 100-200% returns which I would call a good year.


    Sounds like you agree about the opportunity but are unsure of the timing? That's certainly a fair statement.
    9 Jan 2014, 09:20 AM Reply Like
  • Bio Bull
    , contributor
    Comments (252) | Send Message
    Author’s reply » I had a really good question via a source outside Seeking Alpha which I'd like to share here...


    The question was between Tonix and Evoke, which one did I think was more likely to get positive trial results and FDA approval.


    My reply is as follows:


    I do want to say outright that EVOK has nowhere near the market that Tonix might ultimately have. However, from a safety of trial perspective, EVOK is even better.


    I'll highlight something from Joe Springer's blog (article has gone private). Tonix is using cyclobenzapine which has been approved for a long time, just not for fibromyalgia. They need to complete a Phase 2B to show it works in that indication. I'm not saying it won't work... it definitely looks promising.


    Evoke is working with metoclopramide which has long been approved in treating diabetic gastroparesis. They intend to convert it to nasal form to treat... gastroparesis! It's just a new method of delivery, and the drug doesn't need to work in any new indication, only the indication we already know it works with. Further, Evoke has completed the Phase 2B which is where a lot of uncertainty rests usually.


    Thus, because Evoke doesn't need to prove itself in a new indication and because it is closer to the finish line, I can say with greater certainty that Evoke is likely to have (comparing between the two) positive trial results and FDA approval.


    I want to be clear... I think both stocks are excellent picks and own both! I thought the question was good because it highlights why I like Evoke - it's hard to imagine much going wrong in the Phase 3 and FDA approval phases.
    10 Jan 2014, 12:28 AM Reply Like
  • 14195192
    , contributor
    Comments (85) | Send Message
    Good point. A likely comparison could be Antares as well. Just got approval on a different delivery of methotrexate for same indication.
    10 Jan 2014, 08:56 AM Reply Like
  • jaha98
    , contributor
    Comments (141) | Send Message
    Thanks Red Bull, I appreciate your work and look forward to your article!


    11 Jan 2014, 03:45 PM Reply Like
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