Can Evoke Pharma Inc. (NASDAQ: EVOK) Afford Another Phase 3 Study Of EVK-001?


So much has been said or happened since Evoke Pharma Inc. (NASDAQ: EVOK) reported disappointing clinical trial results of its diabetic gastroparesis drug candidate EVK-001. One of the most obvious moves was that investors exited the stock in droves, sending it down more than 73% in the last session. But the management and some experts on Wall Street have also weighed in on the outcome of the Phase 3 study of EVK-001.

Nothing strange

The fact that investors quickly lost love for shares of Evoke Pharma Inc. (NASDAQ: EVOK) after the company reported disappointing topline data from Phase 3 testing of EVK-001 was nothing strange. Many investors have no time for companies whose future look uncertain and Evoke quickly found itself in that position.

But the question investors should be asking is whether Evoke can salvage EVK-001. First, the management of the company expressed dismay at the results of the Phase 3 trial of the compound. The CEO, Dave Gonyer, was categorical that the outcome of the study was not what they expected and the results looked like an anomaly. Those are not the kind of words that would come out of the mouth of someone contemplating giving up.

There is no doubt Evoke Pharma Inc. (NASDAQ: EVOK) will be trying to salvage EVK-001. The important questions at this juncture are: doesn’t it stand a chance and can it afford it?

Detailed analysis

Considering that the outcome being shared is from topline data, there is hope that detailed analysis of the whole study might reveal what went wrong if at all something was amiss and how to remedy the situation. If it is about something having gone wrong in the study, Evoke might want to return EVK-001 to clinics for another Phase 3 trial.

Study funding – Evoke Pharma Inc. (NASDAQ: EVOK)

But there is question about the ability of the company to run another Phase 3 study of EVK-001. It requires money to conduct clinical trials and Evoke doesn’t seem to have enough of it. At the end of 1Q2016, the company had cash balance of $6.1 million and short-term debt of $2.4 million. If you look at the figure, you see that it doesn’t look sufficient for a second round of Phase 3 testing of EVK-001 that may have to enroll 200 patients. Now that’s a serious headache.

That explains why analysts at Brean Capital have downgraded the stock to a HOLD from a BUY.

Evoke Pharma Inc. (NASDAQ: EVOK) is developing EVK-001 to treat diabetic gastroparesis in adult women.


Leave A Reply