XML 18 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and Basis of Presentation
6 Months Ended
Jun. 30, 2016
Organization Consolidation And Presentation Of Financial Statements [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.  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.  The Company does not anticipate realizing revenues for the foreseeable future.  The Company’s activities are subject to the significant risks and uncertainties associated with any specialty pharmaceutical company that has substantial expenditures for research and development, including funding its operations.  

The Company has incurred recurring losses and negative cash flows from operations since inception and expects to continue to incur net losses for at least the next several years.  As of June 30, 2016, the Company had an accumulated deficit of approximately $54.3   million.  The Company expects operating losses and negative cash flows to continue for the foreseeable future until such time, if ever, that it can generate significant revenues from the sale of Gimoti (formerly known as EVK-001).

Results of Phase 3 Clinical Trial

On July 18, 2016, the Company announced topline results from its Phase 3 clinical trial that evaluated the efficacy and safety of Gimoti in women with symptoms associated with diabetic gastroparesis. In this study, Gimoti did not achieve its primary endpoint of symptom improvement at Week 4.

Sales of Common Stock and Warrants

On July 25, 2016 and August 3, 2016, the Company completed at-the-market offerings of an aggregate of 5,048,632 shares of common stock for gross proceeds of approximately $14.5 million.  Concurrently in private placements, for each share of common stock purchased by an investor, such investor received from the Company an unregistered warrant to purchase shares of common stock. See Note 5 for further description.

Repayment of Debt

On August 4, 2016, the Company repaid in full the entire $4.5 million of outstanding principal and interest under the Loan and Security Agreement, dated as of May 28, 2014, as amended (the “Loan Agreement”), between the Company, as borrower, and Square 1 Bank, a division of Pacific Western Bank (“Square 1”), as lender.  In connection with such repayment, the Loan Agreement was terminated, and all security, liens or other encumbrances on assets of the Company were released.  See Note 3 for further description.

In addition to the financings that occurred in July and August 2016, the Company may need to raise additional funds to conduct further analyses of the Phase 3 trial data of its product candidate and assess continued development opportunities for this product candidate, to prepare for a meeting with the U.S. Food and Drug Administration (“FDA”), for other working capital and general corporate purposes.  The Company believes that its current cash and cash equivalents, including the proceeds from the financings that occurred in July and August 2016 and after repayment of the debt, will be sufficient to meet estimated working capital requirements and fund operations through at least December 31, 2016.  There can be no assurance that additional financing will be available when needed or on acceptable terms.  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.

Going Concern

In its report on the Company’s financial statements for the year ended December 31, 2015, the Company’s independent registered public accounting firm included an explanatory paragraph expressing substantial doubt regarding the Company’s ability to continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  Though the Company was able to raise aggregate net proceeds of approximately $12.8 million through sales of its common stock and warrants to purchase its common stock in July 2016 and August 2016, as of the date of this filing the Company believes that there is substantial doubt about its ability to continue as a going concern within one year after the financial statements are issued.  Should the Company’s assessment of the Phase 3 clinical trial data and/or other development opportunities result in the Company’s determination to continue the development of Gimoti, the Company anticipates that it will need to continue to complete equity or debt financings to meet future product development milestones.