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Organization and Basis of Presentation
9 Months Ended
Sep. 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 launched U.S. commercial sales of Gimoti in October 2020 through its commercial partner Eversana Life Science Services, LLC (“Eversana”).

The Company’s activities are subject to the significant risks and uncertainties associated with any specialty pharmaceutical company that has launched its first commercial product, including market acceptance of the product and the potential need to obtain additional funding for 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 $6.3 million in cash and cash equivalents at September 30, 2020, the Company anticipates that it will continue to incur losses from operations due to 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 revolving credit facility with Eversana (the “Eversana Credit Facility”), as discussed in Note 5, and future Gimoti product revenue. This period could be shortened if there are any unanticipated increases in planned spending. Even with the remaining amount available under the Eversana Credit Facility and future Gimoti product revenue, 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 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.

Contract Research Organizations and Consultants

The Company relies on contract research organizations (“CROs”) and consultants to assist with ongoing regulatory discussions and submissions to FDA.  If these CROs and consultants are unable to continue their support, this could adversely affect the operations of the Company.

In addition, the Company relies on third-party suppliers and manufacturer for the production of Gimoti. If the third-party manufacturers are unable to continue manufacturing Gimoti, or if the Company loses one of its sole source suppliers used in its manufacturing processes, the Company may not be able to meet commercial supply demand for Gimoti and the commercialization of Gimoti could be materially and adversely affected.

The Company also relies on Eversana for the management of the commercialization of Gimoti, distribution services and a dedicated sales team to sell Gimoti.  If Eversana is unable to continue serving as a dedicated sales team or distributing Gimoti, the commercialization of Gimoti could be materially and adversely affected.

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 begun its commercial activities, including commercial manufacturing, and with Eversana, the commercial sales of Gimoti.  However, there can be no assurance that the Company or Eversana will not be impacted by the COVID-19 pandemic.  For example, Eversana’s commercialization efforts may be adversely affected by operational restrictions imposed on its sales force from quarantines, travel restrictions and bans and other governmental restrictions related to COVID-19.  As a result of these restrictions, their sales force may not be able to conduct in-person interactions with physicians and customers and may be restricted to conducting educational and promotional activities for Gimoti virtually, which may impact Eversana’s ability to market Gimoti.  In addition, the COVID-19 pandemic may disrupt the operations of the Company’s third-party suppliers and manufacturers and delay the Company’s manufacturing timelines of Gimoti, which 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. Processes are being developed for companies to submit for loan forgiveness and the Company plans to submit for loan forgiveness when such processes are finalized.