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EARNINGS CALL TRANSCRIPT
EARNINGS CALL TRANSCRIPT 2015 - Q2
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Executives

David Burke - IR, The Ruth Group Dave Gonyer - Chief Executive Officer Dr. Marilyn Carlson - Chief Medical Officer Matt D’Onofrio - Chief Business Officer.

Analysts

Yale Jen - Laidlaw and Company.

Operator

Greetings and welcome to the Evoke Pharma Second Quarter 2015 Financial Results Conference Call. At this time, all parties are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host David Burke of The Ruth Group. Thank you, Mr. Burke. You may now begin..

David Burke

Good afternoon and welcome to Evoke Pharma’s second quarter 2015 financial results conference call and audio webcast. With me today are Dave Gonyer, Chief Executive Officer; Dr. Marilyn Carlson, Chief Medical Officer; and Matt D’Onofrio, Chief Business Officer of Evoke Pharma.

Earlier today, Evoke issued a press release announcing financial results for the three and six months ended June 30, 2015. We encourage everyone to read today’s press release as well as Evoke’s quarterly report on Form 10-Q, which was filed with the SEC today.

The company’s quarterly report and press releases are available on Evoke’s website at www.evokepharma.com. In addition, this conference call is being webcast through the company’s web and will be archived there for future reference.

Please note that certain of the information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, Evoke management will be making forward-looking statements.

Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business.

These forward-looking statements are qualified by the cautionary statements contained in Evoke’s press releases and SEC filings, including its annual report on Form 10-Q and subsequent filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 13, 2015.

Evoke undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that, I would now like to turn the call over to Dave Gonyer.

Dave?.

Dave Gonyer

Thank you, David and thank you all for joining the call this afternoon. We’ll review Evoke’s financial results for the second quarter of 2015 and provide a business overview and outlook for the company. This has been an exciting, albeit busy time for Evoke.

As we announced in our release this afternoon, by the end of July, we had enrolled a total of 130 patients in our Phase 3 clinical trial of EVK-001, our nasal spray formulation of metoclopramide for the treatment of diabetic gastroparesis in women.

While we have made significant progress from earlier in the year, during the month of July, we had fewer than expected patients to meet the screening criteria, despite July being one of the strongest screening months. This was disappointing given that in the months of May and June, we had the highest monthly enrolment we’ve seen to-date.

Needless to say, we had hoped for better results but we are pleased with the continued interest in the study and quality of the work being done. We are well over half way to the 200 completed subjects planned for this trial.

But based on the number of subjects that met the enrolment criteria last month, we’re now projecting the trial will be fully enrolled in the first-half of next year. There are couple of reasons for this revised timeline.

First, in recent screenings, a lower percentage of patients than expected met the qualification; and second, there are now four ongoing competing clinical trials, enrolling roughly 800 subjects that were not active when we started our Phase 3 trial.

However, while patients might not choose to participate in our clinical trial or may not meet the trial criteria, we believe they are still part of the market opportunity for EVK-001. In a few moments, our Chief Medical Officer, Dr. Carlson will provide you with additional information on the progress of our trial.

In particular, where we faced challenges, which we believe is important for current and potential investors to understand. Evoke has continued to approach the development process in a careful methodical manner in a close communication with the FDA.

These communications have provided important insights into the FDA’s thinking on how gastroparesis trials should be designed and executed. We believe the approach Evoke has taken is further validated and supported by the FDA’s recent guidance to assist sponsors in the clinical evaluation of drugs for the treatment of gastroparesis.

We are very pleased to see that this guidance includes the advice we received previously regarding trial design and study endpoints which we have followed closely. We are confident the design of our Phase 3 clinical trial and study endpoints are consistent with and well positioned to meet the agency’s expectations.

In particular, we are encouraged that this -- that in this guidance, the FDA recognizes that there is an urgent medical need for the development of drug with the favorable risk benefit profile to treat patients with gastroparesis and that patients with diabetic gastroparesis may experience further derangement of glucose control because of unpredictable gastric emptying and altered absorption of orally administered drugs to diabetes.

Period absorption that occurs with gastroparesis underscores the need for and importance of effective non-oral outpatient drugs such as EVK-001 for the treatment of symptoms in this patient population.

We continue to work closely with the FDA and believe this ongoing dialogue will help ensure our new drug application contains necessary data to facilitate FDA review. I would now like to turn the call over to Dr. Marilyn Carlson to provide additional insight into the clinical trial and the enrolment process.

Marilyn?.

Dr. Marilyn Carlson Chief Medical Officer

Thank you, Dave. I appreciate this opportunity to speak with all of you today. We thought it was important and perhaps helpful for me to participate on today’s call, in order to provide investors with a more detailed overview of enrollment process.

As with any clinical trial, it is not uncommon for sponsors to face challenges that can lead to slower enrollment than planned. However, when identifying diabetic patients experiencing gastroparesis symptom flares who are willing and able to participate in the placebo-controlled clinical trial, there can be even more hurdles.

While thee symptomatic gastroparesis patients are the ones most likely to benefit from the non-oral treatment such as EVK-001, they are not always ideal subjects for the clinical trial process and many don’t meet the study entrance criteria.

Most subjects have long standing diabetes and diabetic complications such as peripheral neuropathy in addition to gastroparesis. Many also suffer from cardiovascular disorders, muscular skeletal problems and depression.

Asocial economic impact of these chronic diseases also limits their access to transportation and negatively impacts their availability for screening procedures and study visits. To be eligible, potential study subjects must have reasonable control of their blood sugar.

For many of these patients with gastroparesis, empting delays and symptoms such as nausea and vomiting may control their blood sugar nearly impossible. Absorption of oral medication and in particular oral diabetes medications is erratic due to stomach empting delays, as highlighted in the FDA’s recent guidance.

Participation in a clinical trial requires a commitment from the patient to visit the study site on a weekly basis, to take study drug as instructed and to complete a daily symptom diary. For patients who are experiencing a flare in their gastroparesis symptoms, these requirements maybe too physically demanding to accomplish.

In order to evaluate the effects of our study drug on their gastroparesis symptoms, potential study subjects are required to stop some of their current medications, including medications taken for nausea.

Even if patients are will to do so, stopping there symptomatic treatments can lead to severe symptoms which can make them too sick to participate in this trial.

As our Phase 3 trial design is consistent with the recent FDA guidance, we will not lower the standards set forth in our Phase 3 study entrance criteria to complete enrollment and risk not meeting requirements, described within the guidance. Our approximately 50 U.S.

study sites are working to identify, qualify and guide each subject successfully the study completion.

Based on my 25 years of clinical trial experience in gastrointestinal disease and the screening activity we have seen at our clinical trial sites, I believe that we can identify suitable patients to complete enrollment of the trail on our revised timeline.

With that, I would like to turn the call over to Matt D’Onofrio for a review of the quarterly financials.

Matt?.

Matt D’Onofrio

Thanks, Marilyn and once again thanks for everybody joining today. In the second quarter of 2015, we reported a net loss of $3.2 million or $0.52 per share, this compares with the net loss of $3.5 million or $0.59 per share for the second quarter 2014.

R&D expenses in the second quarter of 2015 were $2.2 million, down from $2.9 million in the second quarter of 2014. General and administrative expenses in the second quarter of 2015 were approximately $976,000 compared with approximately $617,000 for the second quarter of 2014.

Total operating expenses in the second quarter of 2015 were $3.2 million, down from $3.5 million in the second quarter of 2014. Looking at our balance sheet as of June 30, 2015, we had cash and equivalents of $9.9 million. As of early July we had net of approximately $1.35 million, via our ATM program to raise additional capital.

We project the current cash is suitable to fund operations to March 31, 2016.

We continue to maintain an efficient corporate structure as our history, as a public company, we will continue to monitor our balance sheet and cash front and address our capital needs as we feel necessary and will do so in a manner that is most appropriate for the company and shareholders. I’ll hand the call back over to Dave for closing remarks..

Dave Gonyer

Thanks Matt. Overall, we continue to progress toward NDA filing and commercialization of EVK-001 and our optimism continues to grow. As we demonstrated in our Phase 2 clinical trial, we believe our intranasal formulation metoclopramide provides statistically significant and clinically meaningful improvement in symptoms for gastroparesis.

Also of importance, the competing products that are in clinical trials are well behind EVK-001 in the development process. This is due to the clinical trial hurdles to new chemical entities and their need to navigate the end point development process outlined in the new guidance.

Given our positioning, we believe that EVK-001 if approved in a timely manner will be the only novel improvement for treating gastroparesis in decades. With this, we believe there is an excellent opportunity to capture market-share and generate long-term growth.

Currently, there are approximately 4 million prescriptions written annually for the oral version of metoclopramide which even FDA has noted, may not be the most effective way to treat the patients with diabetic gastroparesis because of unpredictable absorption.

Also as the oral product is almost completely generic, there is essentially no marketing for metoclopramide and no company’s out there talking about gastroparesis. Our plan is not only to bring a better treatment options for these patients, but also to increase awareness of the disease as upto 16 million people in the U.S.

alone are thought to have symptoms of gastroparesis but go undiagnosed. That concludes our prepared remarks. We would now like to open the call up to questions.

Operator?.

Operator

We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Yale Jen with Laidlaw and Company. Please go ahead..

Yale Jen

I have two.

And the first one is, so far what percentage of the patients screened are eligible -- turnout to be eligible for the trial, enrolled into the trial? And do you see the percentage change going forward or is there anything you guys need to do improve, accelerate this process?.

Dr. Marilyn Carlson Chief Medical Officer

Our eligibility has been running overall about 40%; we don’t see that changing and we don’t see changing the entrance criteria in any appreciable way. So, we would expect going forward that that will remain the same..

Dave Gonyer

In this trial, patients need to show the signs and symptoms of gastroparesis and to have a flare and also gastric emptying needs to be delayed as well. So, there is timing from that aspect as well..

Yale Jen

And just a follow-up question is that giving the second quarter operating expenses, would that be a reference point or basis that the second half that the operating expenses of the second half will be similar to -- sort of quarterly similar to that second quarter of this year or there would be changes? Because I know there is some reduction in the expense in the R&D side?.

Matt D’Onofrio

We’ve completed some activities in terms of manufacturing activities and some of the other things that are not directly related to the Phase 3 clinical trial. So, there probably were some smaller components that we will not experience in the second half. Of course, a large portion of this is driven by patient enrollment in terms of total expense.

So, should we have a larger influx of patients, there would be some additional cost there. So, I guess as long as trial recruitment continues at the same pace, we will probably be a little bit lower than we were at this last half..

Operator

[Operator Instructions] There are no further questions at this time. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..

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