November 23, 2022

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Oyster Therapeutics Stock: State Of Business Is Confounding (NASDAQ:OYST)

2 min read

Extreme close up eye and eyelashes

Jonathan Knowles/DigitalVision by way of Getty Illustrations or photos

Oyster Place Pharma, Inc. (NASDAQ:OYST) has an accepted product or service, Tyrvaya (OC-01, varenicline answer) Nasal Spray for managing dry eye sickness, and it is also in the pipeline for Neurotrophic Keratopathy Stage 1. NK is a scarce sickness characterised by decreased corneal sensitivity and lousy corneal healing. For the pipeline software, the organization says in its earnings connect with:

We keep on to enroll sufferers in our OLYMPIA Stage 2 research of OC-01 nasal spray aimed at dealing with Phase 1 NK. We keep on being on observe to assume outcomes of this demo in the 2nd half of this year.

Now, coming to the acceptance, Tyrvaya was approved in Oct 2021 and begun in the industry by early November. So this was properly the initial complete quarter of documented earnings for Tyrvaya.

Dry eye sickness takes place in around 38 million People. Existing treatment method solutions are Allergan’s Restasis and Shire’s Xiidra the two are provided as eye drops. Restasis is a delicate immunosuppressant whilst Xiidra is an anti-inflammatory drug. However, presented the formulation that calls for supplying the medications directly to the eye – normally a cumbersome and distressing system – compliance is very low. Furthermore, these therapies acquire months to operate from the onset of treatment. The enterprise says there are 7 million sufferers that have tried out and abandoned the regular therapies.

Tyrvaya makes use of a absolutely new delivery process, as nicely as a exclusive system of action. It is used as a nasal drop, and it functions by triggering the trigeminal nerve which in its change triggers tear output. In 3 medical trials in above 1000 people in delicate, average and intense dry eye ailment – ONSET-1, ONSET-2 and MYSTIC – the drug has shown protection and efficacy. Patients confirmed statistically sizeable improvements in tear film creation as assessed applying the Schirmer’s rating at Week 4, with far more than 50% clients demonstrating best tear manufacturing when compared to about fifty percent that number in the placebo group:

TYRVAYA-treated individuals confirmed statistically important improvements in tear film output as assessed making use of the anesthetized Schirmer’s score (-35 mm) at 7 days 4. Of the patients taken care of with TYRVAYA, 52% reached ≥10 mm improve in Schirmer’s rating from baseline in the ONSET-1 review, and 47% reached ≥10 mm increase in Schirmer’s rating from baseline in the ONSET-2 examine, when compared to 14% and 28% of car or truck-addressed individuals in the ONSET-1 review and the ONSET-2 examine, respectively at Week 4 (p<0.01 in both studies). Of the patients treated with TYRVAYA, the mean change in Schirmer's score was 11.7 mm and 11.3 mm as compared to 3.2 mm and 6.3 mm in the vehicle treated patients in the ONSET-1 study and ONSET-2 study, respectively at Week 4.

So the first full quarter revenue is $2.7mn. Around 19,000 prescriptions were filled, and these were written by 4500 unique prescribers. 65% of all patients went for refills. A number of patients have continued using the medicine for 6 months starting from November.

The company has also taken great strides on the mediclaim front. In February, TYRVAYA was placed on Express Scripts National Preferred basic and high performance formularies, which collectively make up around 26 million lives. The company has gone on to add more payers, and now it has commercial coverage for up to approximately 95 million lives, which represents 52% of all U.S. commercial lives.

Financials

OYST has a market cap of $134mn and a cash balance of $144mn. This is a terrible state of affairs. There’s a short interest of 22%, which says that the market still thinks the company is overvalued. For a commercial stage company with a clinically successful drug to be in this sorry state is unnerving for investors.

Sales and marketing expenses for the three months ended March 31, 2022, were $27.0 million, General and administrative expenses were $12.9 million, and Research and development expenses were $4.7 million. Net product revenues for the three months ended March 31, 2022, were $2.7 million. At this rate, and ignoring any major improvement in sales, the company hardly has cash for 2 more quarters.

In order to curtail some of these high expenses – high for a small company, that is – the company has gone through a restructuring process. This, it says, will lead to $6M-$8M in savings this year but also include laying off up to 50 workers. The company expects savings of $40-$48mn in 2023. These measures will allow it to commercialize Tyrvaya better, and also put focus on the NK pipeline program. This plan will also include retiring John Snisarenko, Chief Commercial Officer, effective July 1.

The company signed a deal with a Chinese firm last year to commercialize Tyrvaya in China against $17.5mn in upfront payment and a stake in that Chinese company.

Bottom Line

I really have nothing to say. Restasis is a billion dollar drug, while Xiidra is a half-a-billion dollar drug. Tyrvaya has an admittedly better mechanism of action and mode of delivery. Yet it is floundering in the market, and I cannot find any reason for that except perhaps lack of execution, which is also difficult to allege given what the company has been doing. All in all, this is a perplexing situation, and when I am perplexed, I tend to avoid buying.

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