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

Oyster Position Pharma, Inc. (NASDAQ:OYST) has an approved solution, Tyrvaya (OC-01, varenicline resolution) Nasal Spray for managing dry eye sickness, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a uncommon sickness characterised by lowered corneal sensitivity and weak corneal therapeutic. For the pipeline application, the business claims in its earnings connect with:

We continue on to enroll clients in our OLYMPIA Stage 2 analyze of OC-01 nasal spray aimed at dealing with Phase 1 NK. We keep on being on track to hope outcomes of this demo in the 2nd 50 percent of this yr.

Now, coming to the acceptance, Tyrvaya was authorized in October 2021 and started out in the industry by early November. So this was effectively the to start with whole quarter of described earnings for Tyrvaya.

Dry eye sickness occurs in around 38 million Us citizens. Current procedure selections are Allergan’s Restasis and Shire’s Xiidra both equally are presented as eye drops. Restasis is a gentle immunosuppressant even though Xiidra is an anti-inflammatory drug. Even so, specified the formulation that involves supplying the medicines straight to the eye – often a cumbersome and agonizing method – compliance is lower. Also, these therapies consider months to do the job from the onset of cure. The organization says there are 7 million individuals that have tried using and deserted the regular therapies.

Tyrvaya employs a absolutely new supply system, as very well as a distinctive mechanism of motion. It is made use of as a nasal fall, and it performs by triggering the trigeminal nerve which in its transform triggers tear production. In 3 scientific trials in about 1000 people in moderate, average and extreme dry eye illness – ONSET-1, ONSET-2 and MYSTIC – the drug has demonstrated safety and efficacy. Clients showed statistically considerable advancements in tear movie production as assessed working with the Schirmer’s score at Week 4, with additional than 50% patients showing ideal tear production as opposed to about fifty percent that quantity in the placebo team:

TYRVAYA-addressed individuals showed statistically substantial enhancements in tear film production 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% accomplished ≥10 mm boost in Schirmer’s score from baseline in the ONSET-1 review, and 47% reached ≥10 mm boost in Schirmer’s rating from baseline in the ONSET-2 study, in contrast to 14% and 28% of motor vehicle-treated sufferers in the ONSET-1 examine and the ONSET-2 research, 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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