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

Oyster Position Pharma, Inc. (NASDAQ:OYST) has an accepted solution, Tyrvaya (OC-01, varenicline alternative) Nasal Spray for managing dry eye illness, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a scarce illness characterised by reduced corneal sensitivity and bad corneal therapeutic. For the pipeline plan, the corporation states in its earnings call:

We carry on to enroll patients in our OLYMPIA Stage 2 review of OC-01 nasal spray aimed at dealing with Phase 1 NK. We keep on being on track to hope outcomes of this trial in the next 50 percent of this year.

Now, coming to the approval, Tyrvaya was authorized in Oct 2021 and began in the marketplace by early November. So this was proficiently the to start with total quarter of claimed earnings for Tyrvaya.

Dry eye sickness happens in in excess of 38 million Us citizens. Present cure choices are Allergan’s Restasis and Shire’s Xiidra both are presented as eye drops. Restasis is a delicate immunosuppressant although Xiidra is an anti-inflammatory drug. Even so, given the formulation that demands providing the prescription drugs specifically to the eye – usually a cumbersome and painful course of action – compliance is reduced. Moreover, these therapies choose months to operate from the onset of procedure. The organization says there are 7 million patients that have tried out and abandoned the conventional therapies.

Tyrvaya makes use of a totally new shipping process, as well as a exclusive system of action. It is applied as a nasal fall, and it functions by triggering the trigeminal nerve which in its switch triggers tear output. In 3 scientific trials in over 1000 individuals in delicate, average and serious dry eye illness – ONSET-1, ONSET-2 and MYSTIC – the drug has shown safety and efficacy. Patients confirmed statistically sizeable advancements in tear movie creation as assessed using the Schirmer’s score at 7 days 4, with a lot more than 50% clients displaying best tear creation when compared to about fifty percent that quantity in the placebo team:

TYRVAYA-taken care of people showed statistically significant enhancements in tear film generation as assessed working with the anesthetized Schirmer’s score (-35 mm) at Week 4. Of the individuals handled with TYRVAYA, 52% realized ≥10 mm increase in Schirmer’s score from baseline in the ONSET-1 analyze, and 47% reached ≥10 mm increase in Schirmer’s score from baseline in the ONSET-2 research, in comparison to 14% and 28% of vehicle-dealt with patients in the ONSET-1 examine and the ONSET-2 analyze, 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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