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Organization and Basis of Presentation
6 Months Ended
Jun. 30, 2020
Organization And Basis Of Presentation [Abstract]  
Organization and Basis of Presentation

1.  Organization and Basis of Presentation

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

Since its inception, the Company has devoted its efforts to developing its sole product, Gimoti™ (metoclopramide) nasal spray, the first and only nasally-administered product indicated for the relief of symptoms in adults with acute and recurrent diabetic gastroparesis.  On June 19, 2020, the Company received approval from the U.S. Food and Drug Administration (“FDA”) for its 505(b)(2) New Drug Application (“NDA”) for Gimoti. The Company expects to launch commercial sales of Gimoti in the fourth quarter of 2020 through its commercial partner Eversana Life Science Services, LLC. (“Eversana”).

The Company has not yet realized revenues from its planned operations and does not anticipate realizing revenues until it begins commercializing Gimoti.  The Company’s activities are subject to the significant risks and uncertainties associated with any specialty pharmaceutical company that is planning to launch its first commercial product, including funding its operations.  

Going Concern

The Company has incurred recurring losses and negative cash flows from operations since inception and expects to continue to incur net losses for the foreseeable future until such time, if ever, that it can generate significant revenues from the sale of Gimoti.  Although the Company had approximately $8.0 million in cash and cash equivalents at June 30, 2020, including a $2 million loan received on June 26, 2020 from a revolving credit facility (the “Eversana Credit Facility”) with Eversana, as discussed in Note 5, the Company anticipates that it will continue to incur losses from operations due to pre-commercialization and commercialization activities, including manufacturing commercial batches of Gimoti, and general and administrative costs to support operations.  The determination as to whether the Company can continue as a going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As a result, the Company believes that there is substantial doubt about its ability to continue as a going concern for one year after the date these financial statements are issued. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.

The Company’s net losses may fluctuate significantly from quarter to quarter and year to year.  The Company believes, based on its current operating plan, that its existing cash and cash equivalents will be sufficient to fund its operations into the second quarter of 2021, excluding any potential additional borrowings from the Eversana Credit Facility and future Gimoti product revenue. This period could be shortened if there are any unanticipated increases in planned spending. Even with the Eversana Credit Facility, the Company may be required to raise additional funds through debt, equity or other forms of financing, such as potential collaboration arrangements, to fund future operations and continue as a going concern.

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 pre-commercialization and commercialization activities. Any of these actions could materially harm the Company’s business, results of operations, financial condition and future prospects. There can be no assurance that the Company will be able to successfully commercialize Gimoti.  Because the Company’s business is entirely dependent on the success of Gimoti, if the Company is unable to secure additional financing, successfully commercialize Gimoti or identify and execute on strategic alternatives for Gimoti or the Company, the Company will be required to curtail all of its activities and may be required to liquidate, dissolve or otherwise wind down its operations.

Impact of COVID-19

To date, the Company has not experienced material disruptions to its financial condition or operations from the novel coronavirus disease (“COVID-19”) pandemic. The Company has continued its pre-commercial activities, including refining the commercial manufacturing process, and with Eversana, has continued preparing for the commercialization of Gimoti.  However, there can be no assurance that the Company or Eversana will not be impacted by the COVID-19 pandemic.  For example, the COVID-19 pandemic may disrupt the operations of the Company’s third-party suppliers and manufacturers and delay the Company’s manufacturing timelines and commercial launch of Gimoti, and may negatively impact the Company’s ability to successfully commercialize Gimoti and generate product sales.  Further, the COVID-19 pandemic and mitigation measures have also had an adverse impact on global economic conditions which could have an adverse effect on the Company’s business and financial condition, including impairing its ability to raise capital when needed. In April 2020, the Company applied for and was approved for a Small Business Administration (“SBA”) loan under the Paycheck Protection Program (“PPP”), established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. On May 1, 2020, the Company received the loan proceeds of approximately $104,000.