Evoke Pharma, Inc. (EVOK) Bundle
Understanding Evoke Pharma, Inc. (EVOK) Revenue Streams
Understanding Evoke Pharma, Inc. Revenue Streams
Primary Revenue Sources: The primary revenue source for the company is net product sales, specifically from the sale of Gimoti, which is used for the treatment of gastroparesis. For the nine months ended September 30, 2024, net product sales amounted to $6,941,042, compared to $3,504,636 for the same period in 2023, representing an increase of 98%.
| Period | Net Product Sales | Year-over-Year Growth |
|---|---|---|
| 9 Months Ended September 30, 2024 | $6,941,042 | 98% |
| 9 Months Ended September 30, 2023 | $3,504,636 |
Year-over-Year Revenue Growth Rate: The year-over-year growth rate for net product sales shows a significant upward trend. For the three months ended September 30, 2024, net product sales were $2,654,186, a 70% increase compared to $1,562,860 in the same quarter of 2023.
| Quarter | Net Product Sales | Year-over-Year Growth |
|---|---|---|
| Q3 2024 | $2,654,186 | 70% |
| Q3 2023 | $1,562,860 |
Contribution of Different Business Segments: The company's primary focus is on the commercialization of Gimoti. The increase in net product sales is attributed to enhanced product adoption and an expanded pharmacy network. The cost of goods sold for the nine months ended September 30, 2024, was $238,031, up from $142,855 in 2023, resulting in a 67% increase.
Significant Changes in Revenue Streams: Notably, research and development expenses significantly decreased from $159,347 in 2023 to $16,322 in 2024, which indicates a shift in focus towards commercialization rather than development. Selling, general, and administrative expenses increased to $10,697,128 in 2024 from $8,745,407 in 2023, marking a 22% rise as the company invested more in marketing and operational activities.
| Category | 2024 Amount | 2023 Amount | Change (%) |
|---|---|---|---|
| Cost of Goods Sold | $238,031 | $142,855 | 67% |
| Research and Development Expenses | $16,322 | $159,347 | -90% |
| Selling, General and Administrative | $10,697,128 | $8,745,407 | 22% |
A Deep Dive into Evoke Pharma, Inc. (EVOK) Profitability
A Deep Dive into Evoke Pharma, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated based on net product sales of $2,654,186 with a cost of goods sold of $104,024, resulting in a gross profit of $2,550,162 and a gross profit margin of 96.1%.
Operating Profit Margin: The loss from operations for the same period was ($1,285,657). The operating profit margin can be calculated as follows:
- Operating Profit Margin = (Loss from Operations / Net Product Sales) x 100
- Operating Profit Margin = (($1,285,657) / $2,654,186) x 100 = (48.4%)
Net Profit Margin: The net loss for the three months ended September 30, 2024, was ($1,312,390). The net profit margin is:
- Net Profit Margin = (Net Loss / Net Product Sales) x 100
- Net Profit Margin = (($1,312,390) / $2,654,186) x 100 = (49.4%)
Trends in Profitability Over Time
Net product sales for the nine months ended September 30, 2024, reached $6,941,042, representing an increase of 98% from $3,504,636 during the same period in 2023. The following table summarizes the operating and net profit margins over the last two years:
| Period | Net Product Sales | Operating Loss | Net Loss | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|---|---|
| Q3 2023 | $1,562,860 | ($1,603,437) | ($1,693,907) | (102.6%) | (108.4%) |
| Q3 2024 | $2,654,186 | ($1,285,657) | ($1,312,390) | (48.4%) | (49.4%) |
| 9M 2023 | $3,504,636 | ($5,542,973) | ($5,804,894) | (158.3%) | (165.6%) |
| 9M 2024 | $6,941,042 | ($4,010,439) | ($4,159,428) | (57.7%) | (59.9%) |
Comparison of Profitability Ratios with Industry Averages
The industry average for net profit margins in the pharmaceutical sector typically hovers around 15%. In contrast, the company's current net profit margin of (49.4%) indicates significant operational challenges. The operating loss margin of (48.4%) also suggests that operational costs are exceeding sales significantly, a common issue for companies in the early phases of commercialization.
Analysis of Operational Efficiency
Operational efficiency can be assessed through cost management and gross margin trends:
- Cost of Goods Sold: For the three months ending September 30, 2024, the cost of goods sold was $104,024, a significant increase from $34,908 in Q3 2023, marking a 198% increase year-over-year.
- Research and Development Expenses: R&D expenses increased to $11,677 in Q3 2024 compared to $0 in Q3 2023.
- Selling, General and Administrative Expenses: These expenses rose to $3,824,142 in Q3 2024 from $3,131,389 in Q3 2023, an increase of 22%.
The gross margin trend shows a strong performance despite the rising costs, with a gross profit margin of 96.1% in Q3 2024, indicating effective pricing strategies and cost controls in production.
Overall, while the company is experiencing growth in sales, the high operating and net loss margins highlight the need for improved cost management to enhance profitability.
Debt vs. Equity: How Evoke Pharma, Inc. (EVOK) Finances Its Growth
Debt vs. Equity: How Evoke Pharma, Inc. Finances Its Growth
The financial structure of Evoke Pharma, Inc. is characterized by a mix of both debt and equity financing. As of September 30, 2024, the company reported the following debt levels:
- Long-term debt: $5,000,000
- Short-term debt: $1,987,637 (accrued interest payable)
In total, the company’s liabilities amounted to $9,766,435 as of September 30, 2024, compared to $9,648,083 at the end of the previous year .
The debt-to-equity ratio is a crucial indicator of financial health. As of September 30, 2024, Evoke Pharma's total stockholders' equity was $4,387,136, resulting in a debt-to-equity ratio of approximately 2.22 (calculated as total liabilities of $9,766,435 divided by total equity of $4,387,136). This ratio suggests a higher reliance on debt compared to equity, which is above the average industry standard of approximately 1.5 for similar biotech companies .
| Debt Type | Amount ($) |
|---|---|
| Long-term Debt | 5,000,000 |
| Short-term Debt | 1,987,637 |
| Total Liabilities | 9,766,435 |
| Total Stockholders' Equity | 4,387,136 |
| Debt-to-Equity Ratio | 2.22 |
Recent activities indicate the company has been proactive in managing its debt. In early 2024, Evoke Pharma raised approximately $6.2 million through the sale of common stock units and pre-funded warrant units . This capital was primarily aimed at supporting ongoing commercialization efforts for its product, Gimoti, and to enhance its operational liquidity.
The company also engaged in several warrant amendments throughout 2024, generating additional funds of $1.2 million in March, $0.3 million in June, and $0.4 million in September . This strategy reflects a balanced approach to financing, utilizing both equity and debt instruments to fund its growth while attempting to mitigate risks associated with high leverage.
As of September 30, 2024, the company’s cash and cash equivalents stood at $11,339,032, providing a cushion for its operations amidst its ongoing debt obligations . This liquidity position is vital as it navigates through its commercialization phase and addresses its accumulated deficit of ($127,598,866) .
Assessing Evoke Pharma, Inc. (EVOK) Liquidity
Assessing Evoke Pharma, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.43, calculated from total current assets of $14,038,083 and total current liabilities of $9,766,435.
Quick Ratio: The quick ratio is approximately 1.37, considering total current assets minus inventories of $493,408, yielding quick assets of $13,544,675.
Analysis of Working Capital Trends
The working capital as of September 30, 2024, is calculated as total current assets minus total current liabilities, amounting to $4,271,648. This reflects an increase from $178,826 on December 31, 2023, indicating improved liquidity.
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, net cash used in operating activities was $(4,218,700), compared to $(3,878,873) in the same period of 2023.
Investing Cash Flow: There were no significant investing activities reported for the nine months ended September 30, 2024.
Financing Cash Flow: Cash provided by financing activities was $10,818,306 for the nine months ended September 30, 2024, primarily from the sale of common stock and warrants .
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents stood at $11,339,032, compared to $4,739,426 at the beginning of the year, indicating a strong liquidity position. However, the company reported a net loss of $(4,159,428) for the nine months ended September 30, 2024, which may raise concerns regarding sustained cash burn .
| Metric | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Current Assets | $14,038,083 | $6,826,909 |
| Current Liabilities | $9,766,435 | $9,648,083 |
| Working Capital | $4,271,648 | $178,826 |
| Cash and Cash Equivalents | $11,339,032 | $4,739,426 |
| Net Loss (9 months) | $(4,159,428) | $(5,804,894) |
Is Evoke Pharma, Inc. (EVOK) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the company's stock price was $8.16. The valuation metrics are crucial for determining whether the stock is overvalued or undervalued. Below are the key ratios:
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | N/A (Net loss reported) |
| Price-to-Book (P/B) Ratio | 2.7 (Calculated as market price per share / book value per share) |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | N/A (Negative EBITDA) |
Over the past 12 months, the stock price has exhibited fluctuations. The following table summarizes the stock price trends:
| Date | Stock Price ($) |
|---|---|
| September 30, 2023 | 5.00 |
| December 31, 2023 | 6.50 |
| March 31, 2024 | 7.50 |
| June 30, 2024 | 8.00 |
| September 30, 2024 | 8.16 |
As of September 30, 2024, the company had no dividend yield or payout ratio due to ongoing net losses. The net loss for the nine months ended September 30, 2024, was $4,159,428, with a net loss per share of $3.01.
Analyst consensus on the stock valuation is as follows:
| Analyst Firm | Rating |
|---|---|
| Firm A | Buy |
| Firm B | Hold |
| Firm C | Sell |
In summary, the current valuation metrics indicate that the stock may be considered overvalued based on the P/B ratio and the absence of positive earnings or cash flows. The analyst ratings reflect a mixed outlook, with some recommending buying while others suggest holding or selling.
Key Risks Facing Evoke Pharma, Inc. (EVOK)
Key Risks Facing Evoke Pharma, Inc.
Industry Competition: The pharmaceutical industry is highly competitive, with numerous companies developing treatments for gastrointestinal disorders. As of September 30, 2024, the company faced competition from established players and new entrants, which could impact market share and pricing strategies.
Regulatory Changes: The company operates under strict regulatory oversight. Any changes in FDA regulations or approval processes could delay product launches or increase compliance costs. For instance, as of September 30, 2024, the company had ongoing obligations related to post-marketing studies for its product.
Market Conditions: Economic downturns or changes in healthcare policies, including reimbursement rates from Medicare and Medicaid, could adversely affect sales. Approximately 34% of filled prescriptions for Gimoti were from government programs as of September 30, 2024, highlighting the potential impact of policy changes on revenues.
Operational Risks
The company reported significant operational risks related to its reliance on a single product, Gimoti, which is the first and only nasal spray approved for diabetic gastroparesis. As of September 30, 2024, the company had incurred a net loss of $4,159,428 for the nine months ended September 30, 2024, compared to $5,804,894 for the same period in 2023.
Moreover, the company has ongoing obligations to Eversana for commercialization activities. As of September 30, 2024, unreimbursed commercialization costs to Eversana amounted to approximately $72.8 million.
Financial Risks
As of September 30, 2024, the company's total liabilities stood at $9,766,435, while total assets were $14,153,571. The company has incurred recurring losses since its inception, raising concerns about its ability to continue as a going concern. The liquidity position showed cash and cash equivalents of $11,339,032, which may not be sufficient to cover future operational expenses.
Strategic Risks
Strategically, the company is heavily dependent on the success of Gimoti. If the product fails to achieve significant market penetration or if there are adverse events reported post-launch, the company could face substantial financial difficulties. The company reported net product sales of $6,941,042 for the nine months ended September 30, 2024, compared to $3,504,636 for the same period in 2023, indicating growth but also reliance on continued performance.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Presence of numerous competitors in the pharmaceutical sector. | Potential loss of market share and pricing power. |
| Regulatory Changes | Changes in FDA regulations affecting approval processes. | Delays in product launches, increased compliance costs. |
| Market Conditions | Economic downturns and changes in healthcare policies. | Adverse effects on sales and revenues. |
| Operational Risks | Dependence on a single product and obligations to Eversana. | Financial instability and increased costs. |
| Financial Risks | High total liabilities relative to assets. | Concerns about liquidity and going concern status. |
| Strategic Risks | Reliance on Gimoti for revenue generation. | Financial difficulties if product performance declines. |
Mitigation strategies include ongoing commercialization efforts, diversification of product offerings, and maintaining close relationships with regulatory agencies. The company is actively seeking additional funding through debt or equity financing to support its operations.
Future Growth Prospects for Evoke Pharma, Inc. (EVOK)
Future Growth Prospects for Evoke Pharma, Inc. (EVOK)
Analysis of Key Growth Drivers
The primary growth drivers for Evoke Pharma include product innovations and market expansions. The company’s flagship product, Gimoti (metoclopramide nasal spray), received FDA approval in June 2020 and has shown promising sales growth. For the nine months ended September 30, 2024, net product sales reached $6,941,042, up by 98% compared to $3,504,636 for the same period in 2023 .
Future Revenue Growth Projections and Earnings Estimates
Revenue growth is expected to continue as Evoke Pharma expands its pharmacy networks and enhances marketing efforts. The company recorded net product sales of $2,654,186 for the three months ended September 30, 2024, reflecting a 70% increase from $1,562,860 in the same quarter of 2023 . Analysts project that with increased adoption and market penetration, the annual revenue could potentially exceed $10 million by the end of 2025, contingent on successful commercialization strategies.
Strategic Initiatives or Partnerships that May Drive Future Growth
Strategic partnerships play a crucial role in Evoke Pharma's growth trajectory. The ongoing collaboration with Eversana, which handles the commercialization and distribution of Gimoti, allows for a broader reach in targeted healthcare markets. As of September 30, 2024, Evoke Pharma had approximately $72.8 million in unreimbursed commercialization costs owed to Eversana, which are expected to be recouped through future profits .
Competitive Advantages that Position the Company for Growth
Evoke Pharma benefits from a unique product offering in the market, particularly as it relates to the treatment of diabetic gastroparesis. The recent study presented at the American College of Gastroenterology 2024 Annual Meeting demonstrated that patients using Gimoti experienced significant reductions in healthcare visits compared to those using oral forms of metoclopramide. This clinical validation enhances the product's marketability .
Sales and Operational Metrics
| Metric | Q3 2024 | Q3 2023 | Change | % Change |
|---|---|---|---|---|
| Net Product Sales | $2,654,186 | $1,562,860 | $1,091,326 | 70% |
| Cost of Goods Sold | $104,024 | $34,908 | $69,116 | 198% |
| Research and Development Expenses | $11,677 | $0 | $11,677 | — |
| Selling, General and Administrative Expenses | $3,824,142 | $3,131,389 | $692,753 | 22% |
As of September 30, 2024, the total assets of Evoke Pharma stood at $14,153,571, compared to $7,068,546 as of December 31, 2023 . This significant increase in assets is indicative of the company’s enhanced financial health and capacity to invest in further growth initiatives.
Market Expansion Efforts
New inbound prescriptions for Gimoti reached approximately 1,602 during Q3 2024, with a cumulative increase of 8% in new prescribers . The transition to ASPN Pharmacy has also improved the efficiency of prescription processing, which is expected to further increase product adoption rates.
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Resources:
- Evoke Pharma, Inc. (EVOK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Evoke Pharma, Inc. (EVOK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Evoke Pharma, Inc. (EVOK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.