Evoke Pharma(EVOK) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The unaudited condensed financial statements for the period ended June 30, 2022, show increased net product sales but continued net losses, with cash and equivalents at $13.5 million and a going concern uncertainty Condensed Balance Sheets As of June 30, 2022, cash and cash equivalents increased to $13.5 million, total assets grew to $14.4 million, and stockholders' equity rose to $7.2 million due to financing activities Condensed Balance Sheet Data (Unaudited) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $13,450,949 | $9,144,710 | | Total current assets | $14,404,396 | $10,560,734 | | Total assets | $14,404,396 | $10,573,162 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $1,353,146 | $1,405,773 | | Total liabilities | $7,213,386 | $7,018,068 | | Total stockholders' equity | $7,191,010 | $3,555,094 | | Total liabilities and stockholders' equity | $14,404,396 | $10,573,162 | Condensed Statements of Operations For the three and six months ended June 30, 2022, net product sales significantly grew, and net loss narrowed to $2.2 million for Q2 2022 and $4.4 million for the six-month period Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $461,795 | $236,635 | $880,175 | $327,056 | | Loss from operations | ($2,112,632) | ($2,168,996) | ($4,163,805) | ($4,759,445) | | Net loss | ($2,233,380) | ($2,290,643) | ($4,407,045) | ($4,896,138) | | Net loss per share | ($0.71) | ($0.85) | ($1.50) | ($1.85) | Condensed Statements of Cash Flows For the six months ended June 30, 2022, net cash used in operating activities improved to $3.0 million, with $7.3 million provided by financing activities, resulting in a $4.3 million net increase in cash Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,988,737) | ($4,463,608) | | Net cash provided by financing activities | $7,294,976 | $13,115,608 | | Net increase in cash and cash equivalents | $4,306,239 | $8,652,000 | | Cash and cash equivalents at end of period | $13,450,949 | $16,720,939 | - The company has incurred recurring losses and negative cash flows since inception, raising substantial doubt about its ability to continue as a going concern for one year, requiring additional funding[18] - In May 2022, the company effected a 1-for-12 reverse stock split to regain compliance with Nasdaq's minimum bid price requirement, successfully achieved in June 2022[22] - The company is in litigation with Teva Pharmaceuticals, alleging patent infringement after Teva submitted an Abbreviated New Drug Application (ANDA) for a generic version of Gimoti[30] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Gimoti's commercialization, noting an 11% quarter-over-quarter sales increase in Q2 2022, but acknowledges a history of losses and substantial doubt about going concern, with current cash projected to last only into Q2 2023 - The company believes its existing cash of approximately $13.5 million as of June 30, 2022, will be sufficient to fund operations into the second quarter of 2023, but substantial doubt exists about its ability to continue as a going concern[41][53] - Gimoti net product sales were approximately $462,000 in Q2 2022, an 11% increase from Q1 2022, with new inbound prescriptions growing 24% and a patient refill rate of approximately 67%[46] Comparison of Operations (Six Months Ended June 30) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net product sales | $880,175 | $327,056 | +$553,119 | | Research and development expenses | $233,194 | $473,054 | -$239,860 | | Selling, general and administrative expenses | $4,720,251 | $4,480,443 | +$239,808 | - During the six months ended June 30, 2022, the company sold 621,697 shares of common stock under its ATM Sales Agreement, receiving net proceeds of approximately $7.3 million[53][56] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Evoke Pharma, Inc. is not required to provide the information for this item - The company is not required to provide information for this item as it qualifies as a smaller reporting company[58] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2022, the Chief Executive Officer and Chief Business Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[59] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[59] PART II. OTHER INFORMATION Legal Proceedings The company is involved in patent litigation against Teva Pharmaceuticals, alleging infringement after Teva submitted an ANDA for a generic version of Gimoti - On February 25, 2022, Teva Pharmaceuticals submitted an ANDA for a generic version of Gimoti, with Paragraph IV certifications alleging that two of Evoke's patents are invalid or will not be infringed[60] - In April 2022, Evoke initiated litigation against Teva in the U.S. District Court for the District of New Jersey, alleging patent infringement, which Teva has denied and counterclaimed[62] Risk Factors The primary risk factor is the company's need for substantial additional funding to continue operations, with existing cash projected to last only into Q2 2023, risking liquidation if capital cannot be raised - The company requires substantial additional funding and may be unable to raise capital when needed, which would force it to liquidate, dissolve, or wind down operations[63] - Cash and cash equivalents of $13.5 million as of June 30, 2022, are expected to fund operations only into the second quarter of 2023[63] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[63] Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[63] Mine Safety Disclosures This item is not applicable to the company - Not applicable[64] Other Information There is no other information to report for the period - None[64] Exhibits This section provides an index of the exhibits filed with this Quarterly Report on Form 10-Q, including corporate governance documents, certifications, and XBRL data files