Evoke Pharma Moves Full Speed Ahead

| About: Evoke Pharma, (EVOK)
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San Diego, California-based Evoke Pharma, Inc. (NASDAQ:EVOK) is a $70M market cap specialty pharmaceutical company that 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 gastrointestinal (NYSE: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 (IV) forms. Evoke's only drug, EVK-001 is a novel formulation of this drug, designed to provide systemic delivery of metoclopramide through intranasal administration.

Is an investment in Evoke Pharma a good buy?

In Brief/Pro and Con


  • Evoke was co-founded by specialty pharma legend Cam Garner, who serves as the chairperson of the company's board of directors. Garner has an impressive track record building companies that increase in value or are acquired by larger companies.
  • A Phase 2b study that found Evoke's intranasal delivery of metoclopramide was more effective in managing symptoms of diabetic gastroparesis than the marketed oral tablet formulation of metoclopramide.
  • EVK-001 has a strong chance of receiving US Food and Drug Administration (FDA) approval since the agency has previously approved metoclopramide in other delivery forms.
  • Market research and physician interviews have found that treatment options for diabetic gastroparesis are inadequate and there is a high level of interest in effective outpatient options for managing patients with gastroparesis symptoms. The market is currently served by oral and intravenous metoclopramide, and the oral disintegrating tablet (NASDAQ:ODT) formulation of metoclopramide (Metozolv ODT). Due to the limited availability of FDA-approved treatments for gastroparesis, physicians resort to using medications "off-label" in an attempt to address individual symptoms experienced by patients. Off-label therapies are pharmaceuticals prescribed by physicians for an unapproved indication or in an unapproved age group, unapproved dose, or unapproved form of administration.

  • Several analysts are extremely optimistic about Evoke. On January 22, 2014, Aegis Capital reaffirmed its Buy rating and $60 price target on the company's stock. On November 4, 2013, Cantor Fitzgerald initiated coverage on Evoke with a Buy recommendation and a $19.00 price target.


  • Investing in micro-cap stocks is always risky. Evoke has a low $70M market capitalization. All investments involve risk, but investing in micro-cap companies like Evoke is especially risky. These stocks are often extremely volatile, may be illiquid, and are often subject to manipulation.
  • Evoke has incurred significant operating losses since it was founded in 2007. The company expects to incur significant losses for the next several years as it begin its Phase 3 clinical trial for EVK-001. The net loss for the year ended December 31, 2012 and the nine months ended September 30, 2013 was $2 million and $1.2 million, respectively. As of September 30, 2013, Evoke had an accumulated deficit of $21.1 million. The company will probably need to obtain additional funds to complete its planned Phase 3 trial for EVK-001, as well as finance any additional development requirements requested by the FDA.
  • Evoke could face potential competition from companies with substantially greater financial and technical and human resources and experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products, and the commercialization of those products. As a result, these companies may be more successful than Evoke may be in obtaining FDA approval for drugs and achieving widespread market acceptance. These companies include GlaxoSmithKline (NYSE:GSK), Theravance Inc. (THRX), Salix Pharmaceuticals (NASDAQ:SLXP), and others.

  • There are serious safety issues associated with metoclopramide. The oral and IV formulations of the drug carry a "black box warning".

  • Evoke is a single-product company. If EVK-001 is not approved, the company will have a virtually empty pipeline.

In Depth/Overview/Background

Cam Garner

Evoke was co-founded by specialty pharma legend Cam Garner, who serves as the chairperson of the company's board of directors. Garner has an impressive track record building companies that increase in value or are acquired by larger companies. He co-founded specialty pharmaceutical companies Zogenix, Inc. (NASDAQ:ZGNX), Cadence Pharmaceuticals, Inc. (CADX), Somaxon Pharmaceuticals, Inc. (acquired by Pernix Therapeutics (NYSEMKT:PTX) in March 2013), Elevation Pharmaceuticals, Inc. (acquired by Sunovion Pharmaceuticals in September 2012), DJ Pharma (sold to Biovail in 2000), Verus Pharmaceuticals, Inc., Xcel Pharmaceuticals, Inc. (acquired by Valeant Pharmaceuticals (NYSE:VRX) in March 2005) and Meritage Pharma, Inc. He has served as chairman of Zogenix, Cadence (CADX), Verus, Elevation and Meritage. He was CEO of Dura Pharmaceuticals, Inc. from 1989 to 1995 and its Chairman and CEO from 1995 to 2000, until it was sold to Elan in November 2000. Garner also serves on the board of directors of Aegis Therapeutics, Inc., Cadence Pharmaceuticals, Inc., Meritage Pharma, Inc., Neurelis, Inc., and Zogenix.

In June 2007, Evoke acquired worldwide rights, data, patents, and other related assets associated with EVK-001 from Questcor Pharmaceuticals (QCOR). The company paid Questcor $650,000 upfront, and is required to make additional milestone payments totaling up to $52 million. These milestones include up to $5 million in payments if EVK-001 achieves the following development targets of $500,000 upon the initiation of the first patient dosing in the planned Phase 3 clinical trial for EVK-001, $1.5 million upon the U.S. Food and Drug Administration's, or FDA's, acceptance for review of a new drug application, or NDA, for EVK-001, and $3 million upon the FDA's approval of EVK-001.

The remaining $47 million in milestone payments depend on EVK-001's commercial success, and will only apply if EVK-001 receives regulatory approval. Evoke is required to pay to Questcor a low single-digit royalty on net sales of EVK-001. The company's obligation to pay such royalties terminates upon the expiration of the last patent right covering EVK-001, which is expected to occur in 2030.


Since its approval in 1980, metoclopramide has been the only drug approved in the United States to treat gastroparesis. EVK-001 is a novel formulation of metoclopramide offering systemic delivery by intranasal administration.

Since gastroparesis is a disease that blocks or slows the movement of the contents of the stomach to the small intestine, oral drug administration is often compromised since these patients frequently experience nausea and vomiting. EVK-001's intranasal formulation may also provide a predictable and consistent means of delivering metoclopramide in patients with delayed gastric emptying. Intranasal delivery is possible because the mucosa of the nasal cavity is a single epithelial cell layer that allows metoclopramide molecules to be transferred directly to the systemic circulation. There is no first pass liver metabolism required prior to onset of action.

Evoke believes EVK-001 could also offer an alternative route of administration for female patients with severe symptoms of diabetic gastroparesis, who typically receive the IV formulation of metoclopramide.

EVK-001 was studied in a multi-center, randomized, double-blind, placebo-controlled parallel group, dose-ranging Phase 2b clinical trial in 287 subjects (79% female) with diabetic gastroparesis. Subjects in the trial were between the ages of 18 and 75.

Researchers found that EVK-001 reduced the most common and clinically relevant symptoms associated with gastroparesis in women, while exhibiting a favorable safety profile. EVK-001 provided a statistically significant clinical benefit as defined by a reduction in the symptoms of gastroparesis. Male subjects treated with EVK-001 showed some improvement in gastroparesis symptoms, but did not show a statistically significant difference compared to placebo. Due to these results in men, the primary objective of statistical significance in the overall population was not achieved.

Evoke believes this Phase 2b trial is the largest ever conducted in a diabetic gastroparesis population for any approved metoclopramide dosage forms (oral tablet, orally disintegrating tablet, and intravenous). Previous metoclopramide studies enrolled small numbers of subjects and did not evaluate gender. Fewer than 150 subjects were enrolled across all studies included in the new drug application (NDA) for Reglan (metoclopramide). While the EVK-001 Phase 2b trial is the first report of a gender-based difference in response to metoclopramide among subjects with diabetic gastroparesis, gender effects have been reported in drug studies for other GI disorders, such as irritable bowel syndrome (IBS). For example, products such as Promethesus Laboratories/Nestle's (OTCPK:NSRGY) Lotronex (alosetron), Zelnorm (tegaserod) and Sucampo Pharmaceuticals' (NASDAQ:SCMP)/Takeda Pharmaceuticals' (OTCPK:TKPYY) Amitiza (lubiprostone) were approved by FDA based on effectiveness in women, but not in men.

The Phase 2b clinical trial consisted of up to a 23-day screening period and a seven-day washout period, followed by 28 days of treatment with study drug. Researchers evaluated two dosage strengths of EVK-001: 10 mg and 14 mg; as well as placebo. The study drug was administered for the 28-day treatment period as a single intranasal spray four times daily, 30 minutes before meals and at bedtime. Subjects recorded the severity of their gastroparesis symptoms in a telephonic diary using an interactive voice response system once each day. The symptoms were analyzed using a patient reported outcomes instrument, the Gastroparesis Cardinal Symptom Index Daily Diary, (GCSI-DD), developed for collecting and analyzing data to evaluate the effectiveness of treatments for gastroparesis.

On January 22, 2014, Evoke announced the publication of a study that found intranasal delivery of metoclopramide to be more effective in managing symptoms of diabetic gastroparesis compared to the marketed oral tablet formulation of metoclopramide.

"It is intuitive that a nasal spray will have more reliable absorption than a tablet in patients with delayed gastric emptying. These data from symptomatic diabetic gastroparesis patients confirm that metoclopramide nasal spray is well-tolerated and can offer better symptom relief than a tablet in this population," Marilyn Carlson, D.M.D., M.D., RAC, Evoke's Chief Medical Officer stated.

The Phase 2b study, which was published online ahead-of-print for an upcoming issue of Neurogastroenterology & Motility, enrolled 89 patients from six study sites throughout the United States. The multicenter, randomized, open-label, parallel design study was the first to compare the efficacy and safety of metoclopramide nasal spray to oral tablets in diabetic patients with symptoms of gastroparesis when dosed four times a day for six weeks.

"We believe the results from our Phase 2b clinical trial validate our novel intranasal delivery system of metoclopramide (EVK-001) which will be evaluated soon in our upcoming Phase 3 clinical trial," said Dave Gonyer, R.Ph., Evoke's President and CEO. "There haven't been any new drugs for the management of symptoms associated with gastroparesis approved by the FDA since 1980, and there are very few drugs in clinical development for this debilitating diabetic complication."

Evoke estimates the costs to complete a Phase 3 clinical trial in women, a companion clinical trial in men, and a thorough QT study of EVK-001 will be approximately $15 million. The company may require substantial additional capital to continue its clinical development, and will require substantial additional capital for potential commercialization activities.

Aegis Capital analyst Raghuram Selvaraju stated,

"In our view, the publication of the results from this trial underscores the differentiated profile of Evoke's lead drug candidate, EVK-001. We expect the pivotal trial of this agent, a ~200-patient, randomized, placebo-controlled study, to begin enrollment within the next four to five months. In our view, Evoke remains one of the most undervalued and underappreciated investment opportunities in the healthcare sector."

Selvaraju believes that Evoke could produce pivotal data in mid-2015, file for approval several months after, and come to market in late 2016. The analyst believes Evoke's intranasal metoclopramide formulation could generate over $400mm in peak annual sales.


Gastroparesis, also called delayed gastric emptying, is a disorder that slows or stops the movement of food from the stomach to the small intestine. Normally, the muscles of the stomach, which are controlled by the vagus nerve, contract to break up food and move it through the gastrointestinal (GI) tract from the mouth to the anus. The movement of muscles in the GI tract, along with the release of hormones and enzymes, allows for the digestion of food. Gastroparesis can occur when the vagus nerve is damaged by illness or injury and the stomach muscles stop working normally. Food then moves slowly from the stomach to the small intestine or stops moving altogether.

Gastroparesis affects more than 1.5 million Americans, with approximately 100,000 suffering from a severe form of the disorder. Standard medical therapy fails to relieve symptoms in approximately 30,000 of these patients. Risk factors include diabetes, obesity, narcotics use, and Parkinson's disease.

According to Temple University Digestive Disease Center researchers, at least 20% of people with type 1 diabetes develop gastroparesis. Gastroparesis also occurs in people with type 2 diabetes, although less often.

The business intelligence and research firm GlobalData found drug pipeline for the treatment of diabetic gastroparesis is not strong enough to support the ever-growing prevalence of the disease, leaving room for new market entrants.

GlobalData analysts found that there was a high level of unmet need in the diabetic gastroparesis therapeutics market, which can only be fulfilled by new drugs offering better efficacy and safety profiles combined with a low cost of therapy.

The prevalence of diabetes is rapidly increasing on a global scale. GlobalData expects these numbers to reach 366 million by 2030. Approximately 5% to 12% of diabetes patients suffer from gastroparesis, indicating that an increase in the prevalence of diabetes will subsequently increase cases of gastroparesis. GlobalData predicts the end result will be an increased usage of drug therapy, which will in turn create opportunities for companies to develop drugs for the growing diabetic gastroparesis market.

GlobalData found that the existing treatment options for diabetic gastroparesis are not meeting market demand and that there is a high level of unmet need in terms of safety and efficacy. The market is currently served by metoclopramide, including the generic version and Salix Pharmaceuticals' oral disintegrating tablet (ODT) formulation of metoclopramide (Metozolv ODT), and other off-label therapies such as erythromycin, botulinum toxin (Allergan's (NYSE:AGN) Botox), and cisapride.

According to the American College of Gastroenterology (ACG), metoclopramide is the first line of prokinetic therapy and should be administered at the lowest effective dose. Metoclopramide carries a black box warning due to serious adverse drug reaction (tardive dyskinesia), while off-label drugs such as cisapride are no longer available in the United States because of associated safety concerns.

According to the ACG, the risk of tardive dyskinesia has been estimated to be < 1%. Patients should be instructed to discontinue therapy if they develop side effects including involuntary movements (Moderate recommendation, moderate level of evidence).


Metoclopramide is a potent dopamine receptor antagonist that promotes gastric emptying and functions as an antiemetic. It is indicated for diabetic gastroparesis and for relief of symptomatic documented gastroesophageal reflux disease (GERD). Prior to the approval of Metozolv ODT, metoclopramide was available in intravenous (IV), intramuscular (IM), and oral tablet formulations. The U.S. market for tablet formulation metoclopramide in 2008 was 6.4 million prescriptions, equating to 511 million total tablets. Metoclopramide has been available in the United States since 1980 and has published clinical data regarding the safety and efficacy as an that antiemetic dates back to the 1960s.

Treatment with metoclopramide can cause tardive dyskinesia, a serious movement disorder that is often irreversible. Tardive dyskinesia is characterized by involuntary, repetitive movements of the extremities, lip smacking, grimacing, tongue protrusion, rapid eye movements or blinking, puckering, pursing of the lips, or impaired movement of the fingers.

The risk of developing tardive dyskinesia increases with the duration of treatment and the total cumulative dose. There is no known treatment for tardive dyskinesia. In some patients, symptoms may lessen or resolve after metoclopramide treatment is stopped.

Treatment with metoclopramide for longer than 12 weeks should be avoided in all but rare cases where therapeutic benefit is thought to outweigh the risk of developing tardive dyskinesia.

In clinical studies, the most frequently reported adverse events (= 2% occurrence) were headache, nausea, fatigue, somnolence, and vomiting.

In February 2009, the FDA ordered manufacturers of drugs containing metoclopramide to incorporate a "black box warning" package inserts for the drug. A black box warning is the FDA's strongest warning about the potential serious side effects of a drug. The required warning states that:

  • Metoclopramide can cause tardive dyskinesia, a serious, often irreversible, movement disorder for which there is no known treatment.
  • The risk of developing tardive dyskinesia increases with the length of treatment and total amount of the drug that is taken.
  • Except for rare cases, metoclopramide should not be used for longer than 12 weeks.

Over 70 lawsuits have been filed in the United States alleging that manufacturers producing metoclopramide-containing drugs failed to adequately study the drug, or adequately warn about the extent of the risk that users may suffer.

In July 2013, the European Medicines Agency (EMA) Committee on Medicinal Products for Human Use (CHMP) recommended restricting the use of metoclopramide in order to reduce the risks of potentially serious neurologic adverse effects associated with the drug, such as short-term extrapyramidal disorders and tardive dyskinesia.

The CHMP announced that metoclopramide is now contraindicated in children younger than one year old. In older children, the agency ruled that the drug should only be used as a second-choice treatment for the prevention of delayed nausea and vomiting after chemotherapy and for the treatment of postoperative nausea and vomiting.

In adults, the CHMP ruled that metoclopramide should no longer be used in chronic conditions such as gastroparesis, dyspepsia, and gastroesophageal reflux disease, and should not be used as an adjunct in surgical or radiologic procedures. Metoclopramide can be used for the prevention and treatment of nausea and vomiting associated with chemotherapy, radiotherapy, surgery, and migraine.

The CHMP also stated that the daily maximum dose is now 0.5 mg/kg body weight; for adults, the maximum is 30 mg daily (administered as 10 mg 3 times daily). Products containing higher doses should be removed from the market, the committee ruled.

The CHMP noted that oral liquid metoclopramide formulations have been particularly associated with overdose in children. As a result, oral liquid versions containing more than 1 mg/mL will be withdrawn from the market, and oral doses of remaining formulations should be administered using an appropriately designed graduated oral syringe to ensure accuracy.

IV metoclopramide formulations with concentrations above 5 mg/mL and suppositories containing 20 mg will also be withdrawn.

Metozolv ODT

On September 8, 2009, Salix Pharmaceuticals announced that the FDA granted marketing approval for Metozolv ODT (metoclopramide HCl) 5 mg and 10 mg orally disintegrating tablets. Metozolv ODT is indicated for the relief of symptoms in adults associated with acute and recurrent diabetic gastroparesis and for the treatment of short-term therapy (4-12 weeks) for adults with symptomatic documented gastroesophageal reflux disease (GERD) who fail to respond to conventional therapy.

"Metozolv ODT is the first available treatment for both diabetic gastroparesis and symptomatic documented GERD that offers physicians and patients the similar safety and efficacy of metoclopramide with the added convenience of an orally disintegrating tablet formulation," said Ronnie Fass, MD, FACP, FACG and professor of Internal Medicine at the University of Arizona. "Patients with diabetic gastroparesis and symptomatic documented GERD may have trouble adhering to treatment because of difficulty swallowing, the need for treatment when they do not have water available, or the need for a portable way to take medication. Metozolv ODT, which rapidly melts on the tongue, gives these patients a new choice that may be more convenient than traditional metoclopramide tablets."

Other drugs are used off-label or are being developed to treat diabetic gastroparesis:


The American College of Gastroenterology states that domperidone, a type II dopamine antagonist similar to metoclopramide, is equally efficacious but with lower central side effects. It is available for use under a special program administered by the FDA.


Rhythm Pharmaceuticals is conducting a Phase 2 trial studying its investigative drug, RM-131, the company's novel ghrelin agonist as a treatment for gastroparesiis in type 1 and type 2 diabetes. RM-131 is in Phase 2 clinical trials for the treatment of diabetic gastroparesis and lower GI functional disorders. RM-131 is a small-peptide analog of ghrelin, a hormone produced in the stomach that stimulates gastrointestinal activity. Derived from the natural ghrelin sequence, RM-131 has been optimized to stimulate gastrointestinal motility, with greater potency and enhanced stability and pharmacokinetics. The FDA has granted Fast Track review status to RM-131 for the treatment of diabetic gastroparesis.


GlaxoSmithKline is developing GSK962040, a selective non-peptide motilin receptor agonist under development for the treatment of conditions associated with slow rates of gastric emptying. Motilin and non-peptide agonists of motilin receptors increase gastric emptying and may offer a new approach to the treatment of delayed gastric emptying conditions. GlaxoSmithKline is currently conducting a Phase 2 study to assess the effect of repeat doses of GSK962040 on the pharmacokinetics of L-DOPA in Parkinson's Disease patients with delayed gastric emptying.


Researchers at the University of Vermont and Massachusetts General Hospital are conducting a pilot trial to determine if olanzapine (Eli Lilly's (NYSE:LLY) Zyprexa), an anti-psychotic that is currently FDA-approved for the treatment of schizophrenia and bipolar disorder, provides anti-nausea and pro-motility effects in the stomach. Olanzapine also stimulates appetite and promotes weight gain in gastroparesis. Researchers hypothesize that olanzapine may provide anti-nausea and pro-motility effects in the stomach because of actions at several receptors throughout the body, including dopamine and serotonin receptors. Long-term use of olanzapine may also increase plasma levels of ghrelin. Ghrelin is a hormone produced by the gut that stimulates appetite and has also been shown to have beneficial effects on gastroparesis. The investigators hypothesize that olanzapine will be effective and safe in controlling symptoms as well as stimulate appetite and weight gain in gastroparesis. The investigators also hypothesize that olanzapine will stimulate gastric motility as well as modulate the secretion of ghrelin in gastroparesis. This study may provide further information on the efficacy and safety of olanzapine in gastroparesis, which could be utilized in a larger randomized, prospective study in the future.


Theravance, Inc. is conducting a Phase 2 clinical trial studying the effect of velusetrag in subjects with diabetic or idiopathic gastroparesis by assessing changes in gastric emptying. Velusetrag, also known as TD-5108, is a highly selective agonist with high intrinsic activity at the human 5-HT4 receptor. An oral, investigational medicine dosed once daily, velusetrag has completed a 400-patient Phase 2 proof-of-concept study in chronic idiopathic constipation, demonstrating statistically significant prokinetic activity at all three doses tested; at the two lowest doses, velusetrag was generally well tolerated with a low incidence of adverse events. Velusetrag has also been shown to accelerate gastric emptying in healthy volunteers. Velusetrag was discovered by Theravance through the application of its multivalent drug design in a research program dedicated to finding new treatments for gastrointestinal motility disorders. In October 2012, Theravance and Alfa Wassermann entered into a development and commercialization agreement for velusetrag, in development for gastrointestinal motility disorders. Under the agreement, the companies will collaborate in the execution of a two-part Phase 2 program, funded by Alfa Wassermann, to test the efficacy, safety, and tolerability of velusetrag in the treatment of patients with gastroparesis. Alfa Wassermann has an exclusive option to develop and commercialize velusetrag in the European Union, Russia, China, Mexico, and certain other countries. Theravance retains full rights to velusetrag in the United States, Canada, Japan, and certain other countries.


The University of Calgary is collaborating with Janssen Inc./Johnson & Johnson (NYSE:JNJ) in a Phase 2/Phase 3 trial studying prucalopride versus placebo in diabetic gastroparesis. Prucalopride has pro-kinetic properties and has been shown to cause few side effects. The investigators propose to test prucalopride as a treatment for gastroparesis by recruiting 30 patients from the Calgary area who have both diabetes and gastroparesis. The investigators will assess patient symptoms such as nausea and pain as well as quality of life during two gastric emptying tests and throughout the treatment periods. The effectiveness of the active treatment will be evaluated by comparing the extent of the change in symptoms before and after treatments and the difference in gastric emptying times as compared to the placebo treatment. The investigators will also monitor and track all possible side effects that patients experience during the study.


Temple University is currently recruiting subjects for a Phase 3 trial to determine if ProStrakan Inc.'s Sancuso (granisetron transdermal system) improves nausea and vomiting in gastroparesis patients.


On November 13, 2013, Evoke announced its financial results for the third quarter ended September 30, 2013. For the third quarter 2013, the company reported a net loss of approximately $486,000, or $0.41 per share, relatively in line with a net loss of $486,000, or $0.43 per share, in the three-month period ending September 30, 2012. For the nine-month period ended September 30, 2013, net loss was $1.2 million, or $1.06 per share. For the nine months ended September 30, 2012, net loss was $1.3 million, or $1.20 per share.

Research and development expenses were approximately $79,000 for the three months ended September 30, 2013, compared to approximately $337,000 for the three months ended September 30, 2012. The year-over-year decrease was primarily related to the decline in clinical development-related costs, as a larger portion of the labor cost was allocated to general and administrative in 2013 as the company prepared for its initial public offering. For the first nine months of 2013, research and development expenses were approximately $321,000 compared to approximately $847,000 in the prior-year period.

For the 2013 third quarter, general and administrative expenses were approximately $407,000, versus approximately $141,000 for the three months ended September 30, 2012. The increase is primarily attributable to a larger portion of the labor cost being allocated to general and administrative activities in 2013 ahead of the initial public offering. For the nine months ended September 30, 2013, general and administrative expenses were approximately $700,000 versus approximately $493,000 for the first nine months of 2012.

Total operating expenses for the three months ended September 30, 2013 were approximately $486,000, compared to total operating expenses of approximately $478,000 for the three months ended September 30, 2012. The year-over-year increase in operating expenses was due primarily to the increased general and administrative expenses related to the company's initial public offering, partially offset by the reduction in research and development costs associated with the completion of the Phase 2b clinical trial. For the nine months ended September 30, 2013, total operating expenses were $1.0 million compared to $1.3 in the year ago period.

As of September 30, 2013, cash and cash equivalents were $23.7 million, including approximately $22.8 million in net proceeds from Evoke's initial public offering. Following the end of the third quarter, the company received $3.8 million in additional gross proceeds following the exercise of the underwriters' over-allotment, which will be included on the company's balance sheet calculations for the period ending December 31, 2013.

Evoke believes that the company's existing cash and cash equivalents as of September 30, 2013 will be sufficient to meet its anticipated cash requirements for approximately the next 18 months.


Bolstered by more than $25 million in net proceeds from its initial public offering, Evoke appears to be sufficiently capitalized to proceed with its planned Phase 3 trial for EVK-001 as a treatment for the symptoms associated with acute and recurrent gastroparesis in women with diabetes mellitus. By offering a product that can bypass the stomach and directly enter the systemic circulation, EVK-001 provides patients who frequently suffer from vomiting and nausea an attractive alternative to oral and IV formulations of metoclopramide, the only drug approved by the FDA for this condition.

Evoke is moving full speed ahead with EVK-001. The company has completed the manufacturing of the clinical trial material for the study and has begun clinical site selection. The company is targeting approximately 60 U.S. sites and expects that many of the sites will be those that participated in its Phase 2b study. The company anticipates the study initiation will be in the first half of 2014.

Cantor Fitzgerald analyst Irina Rivkind believes that "peak sales for EVK-001 should most likely approach $230M by 2023 (seven years after 2016 launch)" and that the company is adequately capitalized through its Phase 3 data in mid-2015. If these trial results are positive, Rivkind believes that Evoke could get acquired.

There is much to like about Evoke Pharma, but potential investors should also be cautioned about the severe adverse reactions associated with metoclopramide that has resulted in the filing of numerous lawsuits in the United States as well as a recent ruling by the European Medicines Agency (EMA) Committee on Medicinal Products for Human Use (CHMP) restricting the use of metoclopramide.

All investments involve risk, but investing in micro-cap companies like Evoke Pharma is especially risky. These stocks are often extremely volatile, may be illiquid, and are subject to manipulation. The Securities and Exchange Commission (SEC) provides a significant amount of information about the dangers of investing in micro-cap companies and penny stocks. You can find it here.

Disclosure: I am long THRX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.