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

Oyster Stage Pharma, Inc. (NASDAQ:OYST) has an permitted item, Tyrvaya (OC-01, varenicline solution) Nasal Spray for managing dry eye illness, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a uncommon ailment characterised by lowered corneal sensitivity and inadequate corneal therapeutic. For the pipeline plan, the organization says in its earnings phone:

We proceed to enroll clients in our OLYMPIA Period 2 research of OC-01 nasal spray aimed at treating Phase 1 NK. We continue being on observe to count on results of this trial in the 2nd half of this calendar year.

Now, coming to the approval, Tyrvaya was authorised in October 2021 and started out in the market by early November. So this was efficiently the to start with whole quarter of described earnings for Tyrvaya.

Dry eye condition occurs in over 38 million Us citizens. Existing treatment choices are Allergan’s Restasis and Shire’s Xiidra the two are specified as eye drops. Restasis is a moderate immunosuppressant even though Xiidra is an anti-inflammatory drug. Nevertheless, specified the formulation that demands supplying the remedies specifically to the eye – generally a cumbersome and distressing procedure – compliance is low. Additionally, these therapies get months to do the job from the onset of procedure. The company claims there are 7 million clients that have attempted and abandoned the conventional therapies.

Tyrvaya utilizes a entirely new supply method, as well as a exclusive system of motion. It is applied as a nasal drop, and it functions by triggering the trigeminal nerve which in its convert triggers tear production. In 3 medical trials in in excess of 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 improvements in tear film output as assessed applying the Schirmer’s score at 7 days 4, with extra than 50% people exhibiting optimum tear creation as opposed to about 50 % that range in the placebo team:

TYRVAYA-handled sufferers confirmed statistically major improvements in tear movie manufacturing as assessed working with the anesthetized Schirmer’s rating (-35 mm) at 7 days 4. Of the patients taken care of with TYRVAYA, 52% realized ≥10 mm raise in Schirmer’s rating from baseline in the ONSET-1 examine, and 47% reached ≥10 mm improve in Schirmer’s rating from baseline in the ONSET-2 examine, in comparison to 14% and 28% of vehicle-taken care of clients in the ONSET-1 analyze 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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