Evoke Pharma Inc (NASDAQ:EVOK) Is Back In The Game

Evoke Pharma Inc (NASDAQ:EVOK) had a great close to 2016, and is continuing to run up as the new year gets underway. The company closed out January 3 at $2 a share, and closed out the day for a gain of 35%, at $2.7 a piece. The company had a rough start to last year, so some degree of reprieve will be welcome from a shareholder perspective, but what's causing the recent strength, and where's it going to take the company? Here's the answer to both of these questions.First up, Evoke is a biotech company that has spent the last half decade trying to get a drug called Gimoti past the FDA. It's targeting patients with a condition called gastroparesis. The condition involves a patient's gastrointestinal system not being able to digest and pass food quick enough, and it's almost always caused by an underlying diabetes, be it type 1 or 2. Symptoms range from mild to severe, and differ pretty substantially between patients, but generally include stomach cramps, nausea, bloating, stomach wall spasm and, in some cases, a worsening of the underlying diabetes. It's tough to control blood sugar when you can't effectively digest food, and that can make a patient's ability to manage their diabetes difficult.Anyway, there's a currently available standard of care (SOC) treatment in place called metoclopramide. It's one of the top 100 most prescribed medications in the US, and it’s on the WHO list of essential medicines. The mechanism of action (MOA) is pretty convoluted from a jargon perspective, with a host of receptors agonized and antagonized, so we won't go in to it in too much detail, but suffice to say it improves peristalsis of the duodenum and jejunum, increases tone and amplitude of gastric contractions, and relaxes the pyloric sphincter and duodenal bulb. Each of these contribute to an improved gastroprokinetic profile (basically, how quickly and smoothly food moves through the system).Evoke's Gimoti is a reformulation of metoclopramide. The current treatment is administered intravenously, and this has obvious downsides (cost, time, in patient requirements etc.). Gimoti is a nasal spray, which is designed for self administration. Again, the upsides to this are obvious, so we won’t get too much into that for the purposes of this discussion.Mid 2016, Evoke put out topline from a phase III comparing Gimoti to placebo, and the data wasn’t good. The drug didn’t come out as a stat sig improvement over placebo, and that's when the company collapsed. Fast forward to December, however, and the company had sat down with the FDA, and the agency had put forward a potential path to approval. All Evoke has to do is to prove that Gimoti has a bioequivalent pharmacokinetic profile to a drug called Reglan, which is a commercial brand name for metoclopramide. For us, that's as close to a shoo-in as the company could have hoped for, and that's why Evoke gained last month.This month, we've just got news that Evoke has taken a subset of the data from the phase III, and shown that Gimoti is statistically significantly superior to placebo in severe gastroparesis patients. Normally, we'd say this sort of after-the-event analysis is not worth looking at. However, with this one, there's something worth considering. Specifically, the FDA put in place some guidance for development gastroparesis drugs that said the trials should focus on severe patients, and overlook the lower end of the spectrum. This guidance, however, came after the company had already enrolled most of its patients, many of which were low end sufferers.Bottom line, Gimoti is back on track. We're looking for the bioequivalence study to get under way (it should be a quick turnaround study) and the subsequent top line from the study as the next major catalysts. We may see some medium term dilution as the company raises to fund commercialization, but at its current price, there's a huge upside on an NDA submission, so dilution isn’t overly concerning.We will be updating our subscribers as soon as we know more. For the latest updates on EVOK, sign up below!Disclosure: We have no position in EVOK and have not been compensated for this article.