The following discussion and analysis should be read in conjunction with our
financial statements and accompanying notes included in this Quarterly Report on
Form 10-Q and the audited financial statements and accompanying notes thereto
for the fiscal year ended December 31, 2019 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, both
of which are contained in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission, or SEC, on March 12, 2020. Past operating
results are not necessarily indicative of results that may occur in future
periods.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act. All statements other than statements of historical
facts contained in this Quarterly Report on Form 10-Q, including statements
regarding our future results of operations and financial position, business
strategy, commercial activities to be conducted by Eversana Life Science
Services, LLC, or Eversana, the pricing and reimbursement for Gimoti, future
regulatory developments, research and development costs, the timing and
likelihood of success, plans and objectives of management for future operations,
future results of current and anticipated products and the expected impact of
the novel coronavirus, or COVID-19 pandemic, on us or on third parties on whom
we rely, are forward-looking statements. These statements involve known and
unknown risks, uncertainties and other important factors that may cause our
actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statement. In some cases, you can identify forward-looking
statements by terms such as "may," "will," "should," "expect," "plan,"
"anticipate," "could," "intend," "target," "project," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of these terms or other similar expressions. Although we believe the
expectations reflected in these forward-looking statements are reasonable, such
statements are inherently subject to risk and we can give no assurances that our
expectations will prove to be correct. Given these risks, uncertainties and
other factors, you should not place undue reliance on these forward-looking
statements, which speak only as of the date of this Quarterly Report on
Form 10-Q. You should read this Quarterly Report on Form 10-Q completely. As a
result of many factors, including without limitation those set forth under "Risk
Factors" under Item 1A of Part II below, and elsewhere in this Quarterly Report
on Form 10-Q, our actual results may differ materially from those anticipated in
these forward-looking statements. Except as required by applicable law, we
undertake no obligation to update these forward-looking statements to reflect
events or circumstances after the date of this report or to reflect actual
outcomes. For all forward-looking statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
We use our registered trademark, EVOKE PHARMA, and our trademarked product name,
GIMOTI, in this Quarterly Report on Form 10-Q. This Quarterly Report on Form
10-Q also includes trademarks, tradenames and service marks that are the
property of other organizations. Solely for convenience, trademarks and
tradenames referred to in this Quarterly Report on Form 10-Q appear without the
® and ™ symbols, but those references are not intended to indicate, in any way,
that we will not assert, to the fullest extent under applicable law, our rights
or that the applicable owner will not assert its rights, to these trademarks and
tradenames.
Unless the context requires otherwise, references in this Quarterly Report on
Form 10-Q to "Evoke," "we," "us" and "our" refer to Evoke Pharma, Inc.
Overview
We are a specialty pharmaceutical company focused primarily on the development
and commercialization of drugs to treat gastrointestinal, or GI, disorders and
diseases. Since our inception, we have devoted our efforts to developing our
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, we received
approval from the U.S. Food and Drug Administration, or FDA for our 505(b)(2)
New Drug Application, or NDA, for Gimoti. We launched U.S. commercial sales of
Gimoti in October 2020 through our commercial partner Eversana.
Diabetic gastroparesis is a GI disorder affecting millions of patients
worldwide, in which the stomach takes too long to empty its contents resulting
in serious GI symptoms as well as other system complications. The gastric delay
caused by gastroparesis can compromise absorption of orally administered
medications. Gimoti is the only nasally-administered drug currently approved in
the United States to treat the symptoms in adults with acute and recurrent
diabetic gastroparesis.
On January 21, 2020, we entered into an agreement with Eversana for the
commercialization of Gimoti, or the Eversana Agreement. Pursuant to the Eversana
Agreement, Eversana commercializes and distributes Gimoti in the United
States. Eversana also manages the marketing of Gimoti to targeted health care
providers, as well as the sales and distribution of Gimoti within the United
States.
Eversana also provided a $5 million revolving credit facility, or Eversana
Credit Facility, which became available upon FDA approval of Gimoti. In June
2020, we borrowed $2 million under the Eversana Credit Facility.
We have primarily funded our operations through the sale of our convertible
preferred stock prior to our initial public offering in September 2013,
borrowings under our bank loans and the sale of shares of our common stock on
the Nasdaq Capital Market. We have
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incurred losses in each year since our inception. These operating losses
resulted from expenses incurred in connection with advancing Gimoti through
development activities and general and administrative costs associated with our
operations. We expect to continue to incur operating losses until revenues from
sales of Gimoti, which we launched in October 2020, exceed our expenses, if
ever. We may never become profitable, or if we do, we may not be able to sustain
profitability on a recurring basis.
As of September 30, 2020, we had cash and cash equivalents of approximately $6.3
million. Current cash on hand is intended to fund commercialization activities
for Gimoti, including manufacturing commercial batches of Gimoti, and general
and administrative costs to support operations. Our operations have consumed
substantial amounts of cash since inception. We believe, based on our current
operating plan, that our existing cash and cash equivalents will be sufficient
to fund our 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, including as a result of the COVID-19 pandemic.
Even with the remaining amount available under the Eversana Credit Facility, and
Gimoti product revenue, we may be required to raise additional funds in order to
continue as a going concern. Because our business is entirely dependent on the
success of Gimoti, if we are unable to secure additional financing, successfully
commercialize Gimoti or identify and execute other strategic alternatives for
Gimoti or our company, we will be required to curtail all of our activities and
may be required to liquidate, dissolve or otherwise wind down our
operations. Any of these events could result in a complete loss of your
investment in our securities.
Impact of COVID-19
To date, we have not experienced material disruptions to our financial condition
or operations from the novel coronavirus disease, or COVID-19 pandemic. We have
begun our commercial activities, including commercial manufacturing, and with
Eversana commercial sales of Gimoti. However, there can be no assurance that we
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 our third-party suppliers and manufacturers and delay
our manufacturing timelines of Gimoti, which may negatively impact our 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 our business
and financial condition, including impairing our ability to raise capital when
needed. In April 2020, we applied for and were approved for a Small Business
Administration, or SBA, loan under the Paycheck Protection Program, or PPP,
established by the Coronavirus Aid, Relief, And Economic Security, or CARES Act.
On May 1, 2020, we received loan proceeds of approximately $104,000. Based on
the SBA guidelines, we believe that the balance of the loan and accrued interest
will be forgiven in accordance with the terms of the PPP loan. Processes are
being developed for companies to submit for loan forgiveness and we plan to
submit for loan forgiveness when such processes are finalized.
Technology Acquisition Agreement
In June 2007, we acquired all worldwide rights, data, patents and other related
assets associated with Gimoti from Questcor Pharmaceuticals, Inc., or Questcor,
pursuant to an asset purchase agreement. We paid Questcor $650,000 in the form
of an upfront payment and $500,000 in May 2014 as a milestone payment based upon
the initiation of the first patient dosing in our Phase 3 clinical trial for
Gimoti. In August 2014, Mallinckrodt, plc, or Mallinckrodt, acquired
Questcor. As a result of that acquisition, Questcor transferred its rights
included in the asset purchase agreement with us to Mallinckrodt. In addition to
the payments previously made to Questcor, we may be required to make additional
milestone payments totaling up to $52 million. In March 2018, we amended the
asset purchase agreement with Mallinckrodt to defer development and approval
milestone payments, such that rather than paying two milestone payments based on
FDA acceptance for review of the NDA and final product marketing approval, we
would be required to make a single $5 million payment one year after FDA
approval to market Gimoti. At the time of the Gimoti NDA approval by FDA, we
recorded the $5 million payable owed to Mallinckrodt with a due date of June 19,
2021, along with a $5 million research and development expense.
The remaining $47 million in milestone payments depend on Gimoti's commercial
success. We will be required to pay Mallinckrodt a low single digit royalty on
net sales of Gimoti. Our obligation to pay such royalties will terminate upon
the expiration of the last patent right covering Gimoti, which is expected to
occur in 2032, subject to possible extension should any additional, later
expiring, patents be granted.
Financial Operations Overview
Revenue
Our ability to generate revenue and become profitable depends on our ability to
successfully commercialize Gimoti, which we launched in October 2020 through our
commercial partner Eversana. If we or Eversana fail to successfully launch
Gimoti and grow and maintain sales, we may never generate significant revenues
and our results of operations and financial position will be adversely affected.
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Research and Development Expenses
We expense all research and development expenses as they are incurred. Research
and development expenses primarily include:
• clinical and regulatory-related costs;
• expenses incurred under agreements with contract research organizations,
or CROs;
• manufacturing stability testing costs and related supplies and materials; and
• employee-related expenses, including salaries, benefits, travel and
stock-based compensation expense.
All of our research and development expenses to date have been incurred in
connection with the development of Gimoti. With the FDA approval of Gimoti, we
expect research and development costs to decrease and shift to commercialization
and selling costs. However, we expect to begin planning for an FDA
post-marketing commitment pharmacokinetics trial of Gimoti. This trial, which we
expect to begin in 2021, will characterize dose proportionality of a lower
dosage strength of Gimoti to accommodate patients that may require further
dosage adjustments. We are unable to estimate with any certainty the costs we
will incur related to this trial, or the regulatory review of such lower dosage
of Gimoti, though such costs may be significant. Clinical development timelines,
the probability of success and development costs can differ materially from
expectations.
The costs of clinical trials may vary significantly over the life of a project
owing to, but not limited to, the following:
• per subject trial costs;
• the number of sites included in the trials;
• the length of time required to enroll eligible subjects;
• the number of subjects that participate in the trials;
• the number of doses that subjects receive;
• the cost of comparative agents used in trials;
• the drop-out or discontinuation rates of subjects;
• potential additional safety monitoring or other studies requested by
regulatory agencies; and
• the duration of subject follow-up.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related
benefits, including stock-based compensation. Other general and administrative
expenses include professional fees for accounting, tax, patent costs, legal
services, insurance, facility costs and costs associated with being a
publicly-traded company, including fees associated with investor relations and
directors and officers liability insurance premiums. We expect that general and
administrative expenses will increase in the future as we continue to progress
with the commercialization of Gimoti and we reimburse Eversana from the net
profits attained from sales of Gimoti.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which we have prepared in
accordance with generally accepted accounting principles in the United States,
or GAAP. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as the reported expenses during the
reporting periods. We evaluate these estimates and judgments on an ongoing
basis. We base our estimates on historical experience and on various other
factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Our actual results
may differ materially from these estimates under different assumptions or
conditions.
The critical accounting policies and estimates underlying the accompanying
unaudited financial statements are those set forth in Part II, Item 7 included
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,
which was filed with the SEC on March 12, 2020.
Other Information
None.
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Results of Operations
Comparison of Three Months Ended September 30, 2020 and 2019
The following table summarizes the results of our operations for the three
months ended September 30, 2020 and 2019:
Three Months Ended
September 30, Increase/
2020 2019 (Decrease)
Research and development expenses $ 205,032 $ 822,444 $ (617,412 )
General and administrative expenses $ 1,874,578 $ 814,218 $ 1,060,360Research and Development Expenses. Research and development expenses for the
three months ended September 30, 2020 compared to the three months ended
September 30, 2019 decreased by approximately $617,000. The decrease during the
three months ended September 30, 2020 is primarily due to a decrease in research
and development activity following the Gimoti NDA approval by FDA in June
2020. During the three months ended September 30, 2020, we incurred costs of
approximately $158,000 related primarily to continued stability testing of
batches of Gimoti manufactured prior to FDA approval and approximately $36,000
for wages, taxes and employee insurance, including approximately $31,000 of
stock-based compensation expense. Following FDA approval of Gimoti, and until we
begin our post-marketing commitment pharmacokinetics trial, which is expected to
begin in 2021, we expect future research and development expenses to remain
consistent with the current quarter as we have shifted our focus to
commercialization and selling activities, but we will continue to test the
stability of Gimoti manufactured prior to approval.
In 2019, we incurred expenses primarily related to responding to requests for
additional information from FDA for the Gimoti NDA and manufacturing
registration batches of Gimoti as required by FDA. Costs incurred in 2019
included approximately $493,000 for wages, taxes and employee insurance,
including approximately $179,000 of stock-based compensation expense,
approximately $248,000 related to manufacturing, and approximately $75,000
related to responding to FDA information requests on the NDA and preparing for
the NDA resubmission.
General and Administrative Expenses. General and administrative expenses for the
three months ended September 30, 2020 compared to the three months ended
September 30, 2019 increased by approximately $1.1 million as we have shifted
our focus to selling activities. Costs incurred in 2020 primarily included
approximately $1.1 million for wages, taxes and employee insurance, including
approximately $447,000 of stock-based compensation expense, and approximately
$654,000 for legal, accounting, directors and officers liability insurance and
other costs associated with being a public company. Of the general and
administrative expenses incurred during the three months ended September 30,
2020, approximately $745,000 related to commercialization activities. Costs
incurred in 2019 primarily included approximately $423,000 for wages, taxes and
employee insurance, including approximately $152,000 of stock-based compensation
expense, and approximately $326,000 for legal, accounting, directors and
officers liability insurance and other costs associated with being a public
company. General and administration costs are expected to increase in future
periods as we continue to progress with the commercialization of Gimoti.
Comparison of Nine Months Ended September 30, 2020 and 2019
The following table summarizes the results of our operations for the nine months
ended September 30, 2020 and 2019:
Nine Months Ended
September 30, Increase/
2020 2019 (Decrease)
Research and development expenses $ 6,450,979 $ 2,774,924 $ 3,676,055
General and administrative expenses $ 4,387,284 $ 2,955,371 $ 1,431,913
Other (income) expense, net $ 48,546 $ (22,868 ) $ (71,414 )Research and Development Expenses. Research and development expenses for the
nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019 increased by approximately $3.7 million. The increase during
the nine months ended September 30, 2020 is primarily due to recording a $5
million expense in June 2020 upon achieving a technology acquisition milestone
related to FDA's approval of Gimoti. Although the expense was recorded when
incurred, the payment is not due to Mallinckrodt until June 19, 2021. During the
nine months ended September 30,2020, we also incurred expenses responding to
requests for additional information from FDA related to the NDA and preparing
for future manufacturing and the commercial launch of Gimoti. Excluding the
Mallinckrodt milestone expense, research and development expenses decreased
during 2020 as we have shifted our focus to commercialization and selling
activities. Costs incurred in 2020 included approximately $784,000 for wages,
taxes and employee insurance, including approximately $286,000 of stock-based
compensation expense, and approximately $581,000 related to acquiring raw
material prior to obtaining FDA approval of Gimoti and to continued testing of
Gimoti batches that were manufactured prior to FDA approval.
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In 2019, we incurred expenses primarily related to responding to requests for
additional information from FDA and manufacturing registration batches of Gimoti
as required by FDA. Costs incurred in 2019 included approximately $1.8 million
for wages, taxes and employee insurance, including approximately $534,000 of
stock-based compensation expense, approximately $787,000 related to
manufacturing, and approximately $150,000 related to responding to FDA
information requests regarding the NDA and preparing for the NDA resubmission.
General and Administrative Expenses. General and administrative expenses for the
nine months ended September 30, 2020 compared to the nine months ended September
30, 2019 increased by approximately $1.4 million. Costs incurred in 2020
primarily included approximately $2.3 million for wages, taxes and employee
insurance, including approximately $866,000 of stock-based compensation expense,
and approximately $1.8 million for legal, accounting, directors and officers
liability insurance and other costs associated with being a public company. Of
the general and administrative expenses incurred during the nine months ended
September 30, 2020, approximately $1.2 million related to pre-commercialization
and commercialization activities. Costs incurred in 2019 primarily included
approximately $1.4 million for wages, taxes and employee insurance, including
approximately $522,000 of stock-based compensation expense, approximately $1.2
million for legal, accounting, directors and officers liability insurance and
other costs associated with being a public company, approximately $116,000 for
outside consultants and approximately $68,000 for pre-commercialization costs.
Liquidity and Capital Resources
In November 2017, we filed a shelf registration with the SEC on Form S-3. The
shelf registration statement includes a prospectus for the at-the-market
offering to sell up to an aggregate of $16.0 million of shares of our common
stock through B. Riley FBR, Inc., or FBR, as a sales agent, or FBR Sales
Agreement. During the nine months ended September 30, 2019, we sold 6,804,381
shares of common stock at a weighted-average price per share of $0.87 pursuant
to the FBR Sales Agreement and received proceeds of approximately $5.8 million,
net of commissions and fees. During the nine months ended September 30, 2020, we
sold 1,395,855 shares of common stock at a weighted-average price per share of
$2.42 pursuant to the FBR Sales Agreement and received proceeds of approximately
$3.3 million, net of commissions and fees.
As of October 31, 2020, we had the capacity to issue up to approximately $1.7
million of additional shares of common stock pursuant to the FBR Sales
Agreement. Future sales under the FBR Sales Agreement will depend on a variety
of factors including, but not limited to, market conditions, the trading price
of our common stock and our capital needs. There can be no assurance that FBR
will be successful in consummating future sales based on prevailing market
conditions or in the quantities or at the prices that we deem appropriate.
Under current SEC regulations, if at the time we file our Annual Report on Form
10-K, and our public float is less than $75 million, and for so long as our
public float remains less than $75 million, the amount we can raise through
primary public offerings of securities in any twelve-month period using shelf
registration statements is limited to an aggregate of one-third of our public
float, which is referred to as the baby shelf rules. During June 2020, our
public float exceeded $75 million, thereby allowing us to conduct primary
offerings without being constrained by the baby shelf rules. We will remain
unconstrained by the baby shelf rules under our Form S-3 shelf registration
statement until the date we file a new registration statement or our Form 10-K
for the fiscal year ending December 31, 2020, at which time if our public float
is less than $75 million, the amount of securities we may sell under a Form S-3
registration statement will again be limited by the baby shelf rules.
In addition, we will not be able to make future sales of common stock pursuant
to the FBR Sales Agreement unless certain conditions are met, which include the
accuracy of representations and warranties made to FBR under the FBR Sales
Agreement. Furthermore, FBR is permitted to terminate the FBR Sales Agreement in
its sole discretion upon ten days' notice, or at any time in certain
circumstances, including the occurrence of an event that would be reasonably
likely to have a material adverse effect on our assets, business, operations,
earnings, properties, condition (financial or otherwise), prospects,
stockholders' equity or results of operations. We have no obligation to sell the
remaining shares available for sale pursuant to the FBR Sales Agreement.
In connection with the Eversana Agreement, we entered into the Eversana Credit
Facility, pursuant to which Eversana agreed to provide a revolving Credit
Facility of up to $5 million to us upon FDA approval of the Gimoti NDA, as well
as certain other customary conditions. The Eversana Credit Facility terminates
on June 19, 2025, unless terminated earlier pursuant to its terms. The Eversana
Credit Facility is secured by all of the Company's personal property other than
its intellectual property. Under the terms of the Eversana Credit Facility, we
cannot grant an interest in our intellectual property to any other person. Each
loan under the Eversana Credit Facility will bear interest at an annual rate
equal to 10.0%, with such interest due at the end of the loan term. In June
2020, we borrowed $2 million from the Eversana Credit Facility.
Management concluded that there is substantial doubt about our ability to
continue as a going concern. This doubt about our ability to continue as a going
concern for at least twelve months from the date of the financial statements
could materially limit our ability to raise additional funds through the
issuance of new debt or equity securities or otherwise. Future reports on our
financial statements may also include an explanatory paragraph with respect to
our ability to continue as a going concern. We have incurred significant losses
since our inception and have never been profitable, and it is possible we will
never achieve profitability. As of September 30, 2020, we had cash and cash
equivalents of approximately $6.3 million. We believe, based on our current
operating plan, that our
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existing cash and cash equivalents will be sufficient to fund our 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 unanticipated increases in planned spending,
including as a result of the COVID-19 pandemic. Even with the Eversana Credit
Facility and Gimoti product revenue, we 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. Because our business is entirely dependent on the success of Gimoti, if
we are unable to secure additional financing, successfully commercialize Gimoti,
or identify and execute other strategic alternatives for Gimoti or our company,
we will be required to curtail all of our activities and may be required to
liquidate, dissolve or otherwise wind down our operations. Any of these events
could result in a complete loss of your investment in our securities.
These estimates of cash runway could be shortened if there are any significant
increases in planned spending on commercialization activities, including for
marketing and manufacturing of Gimoti, and our general and administrative costs
to support operations. There is no assurance that other financing will be
available when needed to allow us to continue as a going concern. The perception
that we may not be able to continue as a going concern may cause others to
choose not to deal with us due to concerns about our ability to meet our
contractual obligations.
We expect to continue to incur expenses as we:
• continue the commercialization activities for Gimoti;
• manufacture the commercial batches of Gimoti;
• conduct the post-marketing commitment pharmacokinetics trial of Gimoti and
any additional development activities should we seek additional
indications;
• maintain, expand and protect our intellectual property portfolio; and
• continue to fund the accounting, legal, insurance and other costs
associated with being a public company.
The following table summarizes our cash flows for the nine months ended
September 30, 2020 and 2019:
Nine Months Ended
September 30, Increase/
2020 2019 (Decrease)
Net cash used in operating activities $ (4,918,503 ) $ (4,614,403 ) $ 304,100Net cash provided by financing activities $ 5,535,326 $ 5,800,201 $ (264,875 )
Net increase (decrease) in cash and cash
equivalents
$ 616,823 $ 1,185,798 $ (568,975 )
Operating Activities. The primary use of our cash has been to fund our clinical
research, prepare our NDA, manufacture Gimoti, and other general operations. The
cash used in operating activities during the nine months ended September 30,
2020 was primarily related to ongoing communication with FDA related to the
resubmitted NDA, pre-approval and commercialization activities and other ongoing
costs of operating the business. The cash used in operating activities during
the nine months ended September 30, 2019 was primarily related to ongoing
communication with FDA related to the NDA and to manufacturing registration
batches of Gimoti. We expect that cash used in operating activities will
increase due to commercialization activities, including manufacturing of Gimoti.
Financing Activities. During the nine months ended September 30, 2020, we
received net proceeds of approximately $3.3 million from the sale of 1,395,855
shares of common stock pursuant to the FBR Sales Agreement, $2 million from
borrowings under the Eversana Credit Facility, approximately $104,000 from the
PPP loan, and approximately $119,000 from the sale of 118,491 shares of common
stock pursuant to our ESPP. During the nine months ended September 30, 2019, we
received net proceeds of approximately $5.8 million from the sale of 6,804,381
shares of common stock pursuant to the FBR Sales Agreement.
The amount and timing of our future funding requirements will depend on many
factors, including but not limited to:
• the costs of commercialization activities, including costs associated with
commercial manufacturing;
• the commercial success of Gimoti, including competition with
well-established products approved earlier by FDA, including oral and
intravenous forms of metoclopramide, the same active ingredient in the nasal
spray for Gimoti;
• the impact of the COVID-19 pandemic on us or on third parties on whom we
rely;
• our ability to manufacture sufficient quantities of Gimoti to meet demand,
including whether our contract manufacturers, suppliers, and/or consultants
are able to meet appropriate timelines;
• our ability to access the Eversana Credit Facility, which remains subject to
certain customary conditions;
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• the progress and costs of the post-marketing commitment to conduct a
pharmacokinetics trial of Gimoti to characterize dose proportionality of a
lower dose strength of Gimoti and the costs of any additional clinical
trials we may pursue to expand the indication of Gimoti;
• our ability to obtain, maintain and enforce our patents and other
intellectual property rights, and the costs incurred to do so;
• the terms and timing of any collaborative, licensing, co-promotion or other
arrangements that we may establish; and
• costs associated with any other product candidates that we may develop,
in-license or acquire.
Off-Balance Sheet Arrangements
Through September 30, 2020, we have not entered into and did not have any
relationships with unconsolidated entities or financial collaborations, such as
entities often referred to as structured finance or special purpose entities,
which would have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purpose.
Contractual Obligations and Commitments
There were no material changes outside the ordinary course of our business
during the nine months ended September 30, 2020 to the information regarding our
contractual obligations that was disclosed in Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our Annual
Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on
March 12, 2020, except for the $2 million borrowing from Eversana as discussed
in Note 5 in our Notes to Condensed Financial Statements. In addition, with the
approval of the Gimoti NDA, we are now committed to pay Mallinckrodt $5 million
as discussed in Note 3 in our Notes to Condensed Financial Statements.
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