Evoke Pharma, Inc.

Good afternoon, and welcome to the Evoque Pharma fourth quarter and full year 2022 earnings conference call. Currently, all callers have been placed in listen-only mode, and following management's prepared remarks, the call will be opened for questions. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you need to remove yourself from the queue, press star 2. If at any time you should need operator assistance, press star 0. Please be advised that today's call is being recorded. I will now turn the call over to Daniel Kuntabwate. Thank you, and you may begin.

Daniel Kuntabwate Good afternoon, and thank you for participating in EVOPE Commerce conference call today. With me today are David Garnier, EVOPE's Chief Executive Officer, Chris Questenberry, Jamodi's Chief Commercial Officer from Eversana, and Matthew D'Onofrio, EVOPE's Chief Business Officer. By now, you should have a copy of the press release we issued earlier. If not, it is available on the investor relations page of our website at evokepharma.com. We encourage everyone to read today's press release as well as Evoque's annual report on Form 10-K, which is now filed with the SEC. The company's Form 10-K and earnings release are also available on Evoque's website. Please note that certain information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigations Reform Act. We caution listeners that during this call, 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-K and subsequent filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast. 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 David Gagner. Dave?

Thank you, Daniel. Thanks, everyone, for joining us today. I'll start by outlining the important progress Evoque made in 2022 in meeting key strategic goals. I'll also review key events and metrics in the fourth quarter of 2022 and thus far in 2023. I'll then turn the call over to Chris and Matt, who will discuss commercial operations and financials. As I mentioned in today's release, EVOTE's fiscal year 2022 was a period of significant growth and progress on several key fronts. Year-over-year revenues, new Gemoti prescribers, prescription fills, and patient enrollments all showed substantial improvements in 2022 compared to 2021. Looking back in 2021, we focused our attention to Gemoti's value proposition in the marketplace. There was and is a clear unmet need in the market for a non-oral treatment for symptoms associated for diabetic gastroparesis, which for those who are new to the story, is a stomach paralysis caused by the nerve damage that can result from uncontrolled high blood sugars. In such cases, the stomach doesn't empty properly and food and medications may take a long time to leave the stomach and move into the intestines where they need to be to be absorbed. Far too many of the approximately two to three million patients being treated with traditional oral therapeutics for this debilitating disease end up in the ER or take more invasive steps to address their symptoms, of which oral medications simply don't help improve or could have even made symptoms worse. These symptoms can include nausea, vomiting, bloating, abdominal pain, and are often accompanied by dehydration, malnutrition, and erratic blood sugars. Gemoti is our nasal spray formulation of metoclopramide, proven to be an effective medication for treating diabetic gastroparesis. Gemoti is the only FDA-approved nonoral outpatient therapy for gastroparesis, and received FDA approval in June of 2020, and then entered the market in the fourth quarter of 2020. After establishing GEMOTI's viability in the marketplace in 2021 by addressing unmet needs, in 2022 we focused on the following. First, increasing the awareness of and access to GEMOTI as a groundbreaking new treatment for diabetic gastroparesis among patients and their healthcare providers, or HCPs. And those are primarily gastroenterologists. And we did this through face-to-face educational interactions with HCPs by our commercial partner, Eversana, and the sales team, building channel partnerships in conjunction with Eversana to improve access to Gemoti. These include VitaCare, our pharmacy partner, wholly owned by GoodRx, and also Upscript Health, a consumer telehealth platform, and increasing state Medicaid coverage for Gemoti. Second, we succeeded in making progress toward our ultimate objective of having Gemoti become the standard of care for treating diabetic gastroparesis by presenting compelling real-world data at leading medical and scientific forums. And finally, in 2022, we focused on fortifying and enhancing our intellectual property estate to deter potential generic competitors and ensure that Gemoti is the only such product available in the market for as long as possible. And Chris will provide more detail on these areas by expanding on some specific milestones. At Tilgemodi, there has been nothing new to treat gastroparesis in over 40 years since the approval of oral medical opramide and no pharmaceutical company voice in the marketplace. The immense challenge that we have undertaken in upending medical consensus that has been in place for more than four decades simply does not happen overnight. Happily, though, we're making impressive progress in convincing the diabetic gastroparesis treatment community that Jamodi's nasal spray medical mite formulation is an important and needed treatment for patients instead of current oral tablet options. To that point, Jamodi was added to the new gastroparesis guidelines by the American College of Gastroenterology as recommended first-line therapy. This is a very important milestone for Jamodi and Evoke. In September of last year, we announced that Gemoti was nominated for Helio's annual Disruptive Innovators Award under their industry breakthrough category. Gemoti was selected among other novel gastroenterology products from major pharmaceutical companies. Helio is an online source for in-depth specialty clinical information and offers a wide industry accepted news. The Disruptive Innovators Award hosted by Helio is an annual event to honor the trailblazers, movers, and industry personnel that are creating a difference in the field of gastroenterology. And as a nominee for the award, Jamodi was recognized for its role in changing the face of gastroenterology and shifting the status quo towards a betterment of the field. In May 2022, you both participated at DDW at Digestive Disease Week, which is the largest global conference for gastroenterology, and we were pleased to present a poster of distinction to the scientific and clinical experts and key opinion leaders from around the world. The study provided real-world statistics using the largest claims database available, which covers over 80 million lives in the U.S., to assess the incidence of tardive dyskinesia, or TD, for patients taking metoclopramide over a 10-year period. Results for patients that had received metoclopramide demonstrated a lower risk of developing TB than stated in previously reported studies. The data revealed an incidence of TB among gastroparesis patients treated with metoclopramide of just 0.1%. The poster data supports the safety profile of metoclopramide. And the aim of the study was to update the medical literature with current information about the incidence of TD in patients with and without gastroparesis and those taking metoclopramide. By supporting the largest ever real-world study on this important issue, we hope to help HCPs and organizations understand the incidence of TD, recognize patients who might be at higher risk, and revisit the benefit versus the risk of this important compound in patients with gastroparesis. In addition to the new ACG guidelines and Jamodi's first line recommendations, two recent announcements also reveal how we're chipping away at the medical consensus I mentioned earlier. In January of this year, we announced that another of our studies will be presented as an abstract at the Academy of Managed Care Pharmacy, or AMCP, annual meeting taking place this week in San Antonio. The abstract, entitled Real-World Healthcare Resource Utilization of Patients Treated with Metoclopramide Nasal for Diabetic Gastroparesis, is a study of nearly 300 patients using Gemoti that revealed a reduced need to visit the ER or take more invasive steps to treat their condition. These results have been extremely well received with key opinion leaders. Last month, together with Eversana, we reported that yet another abstract was not only accepted but selected for the plenary lecture presentation at the upcoming Digestive Disease Week in Chicago from May 6th to May 9th. This abstract, entitled Reducing Real-World Healthcare Resource Utilization for Patients with Diabetic Gastroparesis Treated with Metaclopramide Nasal Spray versus Oral Metaclopramide, provides compelling healthcare resource utilization data on the effectiveness of Gemoti as a potentially needle-moving solution in the treatment of gastroparesis. For the remainder of 2023 and beyond, we'll continue our strategy of highlighting the benefits of GMODI at important medical meetings and continue to generate new data. Next, as I referred to earlier, fortifying and enhancing EVO's intellectual property estate is a vital component of our strategy to make GMODI brand synonymous with the new treatment paradigm for diabetic gastroparesis. A prime example is the recent successful litigation against generic pharma giant Teva Pharmaceuticals. Last year, we received a Paragraph 4 certification notice letter from Teva. This notice indicated that Teva had submitted an abbreviated new drug application, or ANDA, to FDA, seeking approval to manufacture and sell a generic version of Gemoti prior to the expiration of certain Orange Book-listed patents protecting Gemoti. We initiated a patent infringement lawsuit against Teva and vigorously defended our intellectual property rights protecting the product. And as a result, Teva withdrew its paragraph four for its generic ANDA and will not pursue approval until Gemote's last orange book listed patent expires. And this is currently 2030, but may be extended pending other filed patents. In addition, no further ANDA filer will be eligible to receive 180-day generic exclusivity for an ANDA that references GMODI. This first-to-file regulatory path is typically a highly sought after by generic firms. Consequently, this matter has ended, and we believe the successful outcome reflects the strength of our intellectual property. Furthermore, it strengthens our resolve to defend our rights, particularly against larger, well-resourced companies. During 2022, we also bolstered Gemote's intellectual property estate with key milestones I'll briefly summarize. In December, USPTO issued Evoque a patent under the title Treatment of Moderate and Severe Gastroparesis. This patent expires in 2038 and covers the methods for treating moderate to severe gastroparesis with metoclopramide via the intranasal route of administration. The grant of this patent confirms what we observed in our Phase III trial results from utilizing nasal metoclopramide to treat patients suffering from moderate to severe gastroparesis. In November, the USPTO issued a notice of allowance for a patent application entitled Nasal Formulations of Metoclopramide, which would expire in December 2029. This patent application is a continuation of several other U.S. patents filed by the company over the last decade. And in July, the Canadian Intellectual Property Office granted Evoque a key patent for a previously submitted application entitled Nasal Formulations of Metachloroquine. This patent corresponds to the two other FDA Orange Book listed patents under the same title that expire in 2029 and 2030. The patent covers the methods of use of nasal deliberate metoclopramide for treating diabetic gastroparesis. This Canadian patent expires in 2029 and provides patent protection in another potential market for our novel gastroparesis treatment. We're pleased with the progress we made in 2022 and thus far in 2023 to further establish our proprietary concept of delivering effective medication through the nasal pathway to treat symptoms associated with diabetic gastroparesis. We're eager to further our goal to capitalize on this large and growing market opportunity in the U.S. and abroad. Our intellectual property portfolio now includes FDA Orange Book listed patents and other patents in the EU, Japan, Canada, and Mexico. Before turning the call over to Chris, I want to provide a little color on the fourth quarter of 2022 financial operating results. And Matt will take us through key components of our financials for the quarter and the year as well. As mentioned in today's press release, the fourth quarter saw a slight $36,000 decrease in our net product sales in the third quarter, even though we had an 8% increase in GMODI prescription fills. The reason for this decline after three-quarters of sequential revenue growth in 2022 is straightforward. First, Q4 has more holidays and fewer working days than Q3. Those holidays coincide with the end of the month, which tend to be our stronger weeks, and there were also pharmacy closures due to weather events during that time. And lastly, we experienced a slightly higher number of prescriptions provided to uninsured or underinsured patients. In such circumstances, it devotes practice to offer Gemoti at a discount to those patients in urgent need of gastroparesis symptom relief. We expect to return to positive sequential revenue growth in 2023 as the sales mix returns to levels we saw in the first three quarters of 2022. Finally, the number of cumulative Gemoti prescribers increased by approximately 25% to 1,017 HCPs at December 31st, 2022, from 812 to December 31st, 2021. This metric continues to increase, reaching 205 prescribers at the end of January this year, the highest month on record. And finally, as I've mentioned, prescription fills in the fourth quarter of 2022 increased by 8% compared to the previous quarter. Prescription fills for all of 2022 increased by 178% compared to 2021. With that, I'll turn the call over to Chris.

Thank you, Dave. 2022 was a year of tremendous progress for Evoque, Gemoti, and Eversana. I'd like to add my support to what Dave described as last year's significant progress in physician awareness and patient access to Gemoti. as a needed solution for relief of diabetic gastroparesis symptoms. Our Evoque team within Eversana and in the field, as well as our partners at VitaCare and Upscript Health, continues to execute on our strategy to make Gemoti the standard of care for patients suffering with diabetic gastroparesis and to improve access to Gemoti for appropriate patients. It has not been without challenges at many turns yet our team remains focused and is steadfast to alter the clinical inertia and habit that has been the status quo in this market. Patients deserve better. Broadening and deepening healthcare practitioner trial and adoption of Gemoti was and will continue to remain our priority focus, and we have made steady progress. Viewed forward by many metrics was our best ever. We nearly doubled our new prescribers in 2022, growing 96%. In the fourth quarter alone, we increased new prescribers 43% over Q3. And our total cumulative new prescribers continues to expand to 1,017. Repeat prescribers grew 774% in 2022 versus 21. And in Q4, we expanded our Q3 total by 14%. As prescribers grew, so did expenses at 8% improvement over Q3. Full-year dispense growth was 178% versus 2021. And you just see excellent continuation by our patients with a 79% refill rate for those that have scripts remaining on their treatment. Lastly, refills for demode is a metric we are closely watching. refills grew 34% in Q4 compared to Q3 and 219% year-over-year. The primary driver of performance in Q4 and in 2022 was interactions with healthcare providers. Face-to-face interactions in the post-COVID era continues to be the most important lever. We see a pattern emerging where when a healthcare provider in a practice prescribes Gemoti and has a positive experience, They tend to prescribe more, and those that are in the practice with them begin to adopt Jamodi as well. It is evidence that our total practice approach is paying dividends. In addition, we conducted peer-to-peer educational programs last year. Those programs reached 673 total attendees where the rationale and benefits of Jamodi were discussed, including relevant patient case experience. These programs increased the knowledge of our audience, and we saw a significant impact on prescribing, increasing 44% from prior to attending a program. We plan to double our programming this year to reach a broader audience. To further combat status quo thinking, we leveraged the publication of the updated ACG Guidelines for Gastroparesis. by producing our own summary of the guidelines and highlighting the position of gemoti and oral metoclopramide as first-line pharmacotherapy. This has generated significant conversations and added credibility to our messaging. We also continue to conduct patient market research to track their awareness, trial, and utilization patterns. Our last wave confirms feedback we are hearing from providers and demonstrated that, Roughly 50% of users do not see any symptom improvement from existing oral treatment options, whether they're liquid or tablet forms. 38% of respondents discontinued their gastroparesis medications, primarily due to either side effects or lack of symptom improvement. Of those respondents who were aware of GemoE prior to the survey, 43% are current users. And 100% of those current Gemoti users reported seeing at least some symptom improvement, with diminished nausea being the most cited symptom improvement. Finally, patients rated Gemoti as more favorable than competing treatments on all attributes related to tolerability and efficacy compared to other treatments. We are encouraged by these results, and yet we recognize there is still a significant gap in conversations between patients and providers around whether current therapies are working, what alternative treatments are available, and how these treatments differ. Another contributor to success in 2022 was changing our distribution approach. In May of last year, after a four-month pilot, we switched to distribution divided care prescription services. The switch to VitaCare significantly improved prescribing of Gemoti, allowing ACPs to e-prescribe Gemoti directly. Additionally, we saw the time from the submission of prescription to the delivery of Gemoti to a patient's home, what we call speed to therapy, improve. Reliable access to Gemoti, especially with a low out-of-pocket expense for patients, is a primary driver for their initial and ongoing use. When patients get access to Gemoti, we see and hear positive feedback. With the VitaCare process, our refill rates have continued to improve and is at 79%, the highest we've seen since launch. Another opportunity for Jamodi is coverage by insurance plan. We continue to build on our success and access with 110 payers approving at least one RX since launch. Before, 69% of dispenses were covered by either commercial or government insurance, and that is relatively stable from prior quarters. We are committed to expanding access to GMODI. Part of that commitment comes in continuing to build on the value proposition for GMODI and to demonstrate further evidence. Dave outlined two important new studies that we've recently submitted to medical congresses which have both been accepted. These studies leverage our exclusive pharmacy data for GMODI patients and link it compliantly to claims database, which allows us to understand the utilization of healthcare resources such as physician office visits, hospital outpatient visits, hospital inpatient visits, and emergency room visits. These real-world data complement clinical trial data, which affirm the safety and efficacy of a product in a controlled setting and go beyond that to examine the impact of treatment on various stakeholders like providers, patients, and payers. Very clinical and diverse demographic settings. Now, prior to commenting on the new studies, the previous TARDIS Dyskinesia study we conducted, which was presented at last year's Digestive Disease Week, remained an important clinical update for physicians to be aware of with the use of metoclopramide. whereas various prior small studies published decades ago noticed an incidence rate of 10% or higher with TB for metoclopramide. This groundbreaking analysis examining claims data across 80 million patients in the U.S. showed a much lower incidence at 0.1% of all gastroparesis patients taking metoclopramide over the 10-year survey. These data have received significant attention at several large congresses, helping physicians and patients to understand and assess risk-benefit for use of metoclopramide with the updated information. We plan to submit these data on the incidence of tardive dyskinesia in patients with gastroparesis for publication shortly. The upcoming AMCP study explored the utilization of healthcare resources of 294 patients six months before and six months after initiation of GEMODI. The study showed patients starting GEMODI demonstrated fewer ALCOGS and diabetic gastroparesis-related healthcare resource utilization for office, ER, inpatient, and outpatient visits for the six-month intervals following initiation of treatment, achieving statistical significance for the diabetic gastroparesis-related physician office visits and hospital outcome visits. and a numerical improvement for emergency visits. For all cause-related HRUs, there was a statistically significant reduction in physician office visits. It's important to note that about half these patients tracked were on oral metoclopramide for a mean duration of 8.1 months prior to switching to demoting. The scientific poster for AMCP should be available on the Evoke Pharma corporate website in the coming days. In the next study to be delivered at the plenary session for Digestive Disease Week, 257 patients on Dermody were compared to a matched control of 257 patients with documented utilization of oral metoclopramide over six months in parallel. These data will provide insight to the question, How does GMODI compare to the standard of care for gastroparesis in a rural world setting? These data are really important to understand as studies suggest that patients with diabetic gastroparesis are admitted to the hospital an average of four times a year, and 30% of them are having to be readmitted within 30 days. Cost of the healthcare system is significant, and the impact on patients and their families is considerable. We are excited to share these first-in-class data and believe they will add important new information for patient providers and payers alike. In summary, I'd like to reinforce we are making positive strides in improving adoption and performance of GMODI. By many measures, Q4 was our best quarter to date. We have tackled barriers and continue to address them proactively and with urgency. We continue to invest in value-generating areas and believe those will bear fruit in 2023. Our goal remains to position Gemoti as the standard of care for patients with diabetic gastroparesis. This year, we'll be focused on building on the confidence in Gemoti and in the programs and services surrounding Gemoti. If we're going to change the status quo, then confidence is a currency with which we have to deal in. With that, let me turn the call over to Matt to discuss financials.

Thanks, Chris. Let's turn quickly to financials. As Dave mentioned, for the fourth quarter of 2022, net product sales were approximately $796,000 compared with $361,000 during the fourth quarter of 2021. And the net loss was approximately $1.8 million or $0.54 per share compared with $1.7 million or $0.61 per share for the fourth quarter of 2021. For the year ended December 31, 2022, net product sales were approximately $2.5 million compared with the approximately $1.6 million for the year ended December 31, 2021. And the net loss was approximately $8.5 million or $2.62 per share compared with a net loss of $8.5 million or $3.18 per share for the year ended December 31, 2021. and the annual net losses per share reflected the company's June 2022 1 for 12 reverse stock split. The year-over-year increase in revenue was due to higher net product sales in 2022, resulting from increased face-to-face interactions with physicians, primarily gastroenterologists, and other healthcare providers with our sales partner, Erisana. Greater numbers of physicians within larger groups prescribing Gemoti after the first physician adoption and more increased sales through our VitaCare prescription service partner. Research and development expenses totaled $27,000 for the fourth quarter of 2022 compared with $36,000 for the fourth quarter of 2021. And for the full year of 2022, research and development expenses were approximately $0.3 million compared with approximately $0.6 million for the prior year. Since receiving FDA approval of GMODI in June of 2020, Evoque's research and development costs continue to decrease and shift to commercialization and selling costs. For the fourth quarter of 2022, selling general administrative expenses were approximately $2.3 million compared with $1.7 million for the fourth quarter of 2021. The year ended December 31, 2022. Selling general administrative expenses were approximately $9.6 million versus approximately $8.9 million for the year ended December 31, 2021. The increase in SG&A costs year-over-year resulted primarily from shifting personnel costs from research and development to commercialization costs, along with higher marketing, royalty, and Eversana profit-sharing costs. We expect that selling general administrative expenses will increase in the future as we continue to progress with commercialization of Gemoti, and we reimburse Eversana from the net profits attained from the sales of Gemoti. Total operating expenses for the fourth quarter of 2022 were approximately $2.3 million compared with $1.8 million for the same period of 2021. And for the year ended December 31, 2022, total operating expenses were approximately $10.3 million compared with approximately $9.8 million for the full year of 2021. As of December 31, 2022, cash and cash equivalents were approximately $9.8 million We believe based on our current operating plan that our existing cash and cash equivalent, as well as future cash flows from net product sales of Gemote, will be sufficient to fund operations at least in the third quarter of 2023. And finally, Evoque currently holds the majority of its cash Pacific Western Bank within the ISC, or insured cash sweep accounts. These accounts move funds into separate FDIC insured accounts

You may remove yourself from the queue by pressing start. And we'll take our first question from Yeo Jin with Le Bon Company. Your line is open.

Good afternoon, and thanks for taking the questions and the questions on the quarters. A couple of the first one is that you mentioned that for fourth quarter, you have more under and uninsured patients. What do you anticipate that to reduce in 2023? Was there any sign to suggest that for three months of this year?

No. Thanks, Yale, for the question. No, so far in this first quarter, we have just a little maybe trickle in January, but since then, we haven't.

Yeah, and Yale, this is Matt. I don't think there's any predictive quantities around it, other than, as you know, sometimes around year-end and the beginning of the year, changes in plans and other things can cause hiccups around reimbursement for individuals as they move from one insurer to another. So I think there's maybe a very slight seasonal effect that you can see in the end-of-the-year kind of timeframe, but nothing otherwise.

Okay. The second question is maybe related, which is the cost of goods for the fourth quarter again is substantially higher than the previous three quarters. What have caused that and do you anticipate this cost of goods ratio to continue for the 2023?

Yeah, so I appreciate your question. I guess we don't view this as being as substantially out of whack considering the increase in total product that was being sold. It's possible, I suppose, that based upon some of the earlier products that had been manufactured prior to launch that may have been expensed prior to launch itself, that may have added to it slightly, but otherwise we wouldn't expect there to be anything significant there.

So are you suggesting that the current cost of goods ratio, the margin probably will be similar in 2023? Yes. Okay, and the two more quick ones. The first one is that the commodity has been added to the ACG guidelines. Does that impact on the future, I guess, sales as well as reimbursement? And typically adding to the guideline will have sort of positive impact. I just, what's your thoughts? So certainly being added to the ACG guidelines is a very positive step for a product, and many physicians look to the guidelines for guidance in terms of how to deal with new therapies. So it's definitely a positive. As I mentioned, as we are out there with our field sales organization talking to physicians, physicians appreciate the fact that we've been added to the guidelines and added to that first-line positioning. So it's added a lot of credibility and built confidence in physician prescribing. It still remains to be seen whether that, coupled with some of the evidence generation that we are building, will help us to get access for payers. Okay, maybe the last question here is that earlier, I think, In this last year, you guys have mentioned that you might have to do a Phase IV study. Does that still, could that be the case in 2023? And if so, would that impact on the R&D expenses for 2023? Thanks for answering those questions.

Yes, no problem. Yes, we're still talking FDA about working through that trial. it's still taking time to get agreement to what that trial will look like. So we don't have any expectations, at least in the first half, probably the end of 2023, if any.

Okay, great. Thanks a lot. I really appreciate it. And thanks. Thank you.

Thank you. As a reminder, that is star one to ask a question. All right, we have no further questions in the queue, so this does conclude that portion of today's call. I would now like to turn the call back over to Dave Gagner for any additional or closing remarks.

Great, thank you. I just wanted to close by saying that our effort to make Gemoti the standard of care for diabetic gastroparesis got a major boost last year in the areas that we outlined today. I just wanted to remind everyone that Gemoti is a novel product still in its launch phase And such times come with both exhilarating growth and humbling times, like the slight decrease in Q4 revenues that we saw, though prescriptions were 8% higher. Nonetheless, our trajectory is on a steep positive curve, and we look forward to executing on our strategic plan and reporting the results for the remainder of 2023. Thank you very much for your time.

Ladies and gentlemen, this concludes today's Evoque Pharma fourth quarter and full year 2022 earnings call-in webcast. You may disconnect your line at this time and have a wonderful day.