Organization and Basis of Presentation

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Organization and Basis of Presentation

1. Organization and Basis of Presentation

Evoke Pharma, Inc. (the “Company”) was incorporated in the state of Delaware on January 29, 2007 (inception). The Company is a publicly-held specialty pharmaceutical company focused primarily on the development of drugs to treat gastroenterological disorders and disease.

Since its inception, the Company has devoted substantially all of its efforts to product development, raising capital and building infrastructure, and has not realized revenues from its planned principal operations. Accordingly, the Company is considered to be in the development stage.

As reflected in the accompanying financial statements, the Company has a limited operating history and the sales and income potential of the Company’s business are unproven. The Company has experienced net losses since its inception and, as of December 31, 2013 and 2012, had an accumulated deficit of $22,691,468 and $19,855,003, respectively. The Company had a working capital (deficit) of $22,146,047 and $(454,396) as of December 31, 2013 and 2012, respectively.

The Company expects to continue to incur net losses for at least the next several years. Over that period, the Company will need to raise additional debt or equity financing to fund its development. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, and/or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations, financial condition and future prospects.

On June 13, 2013, the Company’s board of directors approved an amendment to the restated certificate of incorporation to effect a one-for-five reverse stock split of the Company’s common stock (the “Reverse Stock Split”). The amendment effecting the Reverse Stock Split was approved by the stockholders on August 29, 2013. The par value and the authorized shares of the common and convertible preferred stock were not adjusted as a result of the Reverse Stock Split. All issued and outstanding common stock and the conversion ratio of the convertible preferred stock have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented. The Reverse Stock Split was effected on August 30, 2013.

Initial Public Offering and Related Transactions

On September 30, 2013, the Company completed its Initial Public Offering (“IPO”) whereby it sold 2,100,000 shares of common stock at a price of $12.00 per share. On October 8, 2013, the underwriters for the Company’s IPO purchased the over-allotment option for an additional 315,000 shares of the Company’s common stock at $12.00 per share. Net proceeds from the IPO, including the exercise of the over-allotment option, were determined as follows:

Gross proceeds (including over-allotment)	$	28,980,000
Underwriting discounts and commissions and non-accountable expense allowance		(2,344,875	)
Total offering costs (excluding value of warrants granted to underwriter of $470,000)		(1,514,177	)
Net proceeds	$	25,120,948

Additionally, upon the closing of the IPO, certain transactions occurred based on a successful completion of the IPO:

• the conversion of all outstanding shares of convertible preferred stock into 2,439,002 shares of the Company’s common stock;

• retention payments in the amount of $355,000 became payable to the Company’s executive officers. Such amount was recorded as expense on a straight-line basis from May 22, 2013 (the date of the retention agreements entered into with the executive officers) through December 24, 2013, the date at which the final payment was due based on continued employment. Since the terms of the payment required the occurrence of either a change in control of the Company, or an equity financing, neither of which were considered probable to occur until they happen, a catch-up expense of $202,857 was recorded at the time of the Company’s IPO. The executive officers remained with the Company through December 24, 2013 and received the full retention payment;

• the issuance of warrants to purchase 84,000 shares of the Company’s common stock to the representative of the underwriters of the Company’s IPO and certain of its affiliates. The warrants will become exercisable at a price of $21.00 per share beginning on September 24, 2014 and will expire on September 24, 2018. The $470,000 initial fair value of the warrants was determined using the Black-Scholes option pricing model and recorded as a cost of the Company’s IPO and charged to additional paid-in capital;

The fair value of the issued warrants was estimated using the Black-Scholes option pricing model with the following assumptions:

Assumed risk-free interest rate	1.44	%
Assumed volatility	71	%
Expected warrant life	5 Years
Expected dividend yield	0.0	%

• the conversion of warrants to purchase 110,000 shares of convertible preferred stock into warrants to purchase 22,000 shares of the Company’s common stock, and the final remeasurement of fair value and reclassification of the $187,000 warrant liability to additional paid-in capital; and

• the filing of an amended and restated certificate of incorporation to authorize 50,000,000 shares of common stock and 5,000,000 shares of undesignated preferred stock.