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

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Oyster Level Pharma, Inc. (NASDAQ:OYST) has an accredited solution, Tyrvaya (OC-01, varenicline remedy) Nasal Spray for treating dry eye ailment, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a exceptional disease characterised by diminished corneal sensitivity and weak corneal healing. For the pipeline method, the company states in its earnings call:

We go on to enroll clients in our OLYMPIA Section 2 analyze of OC-01 nasal spray aimed at dealing with Stage 1 NK. We remain on keep track of to assume outcomes of this demo in the next fifty percent of this year.

Now, coming to the approval, Tyrvaya was permitted in Oct 2021 and started in the industry by early November. So this was effectively the to start with whole quarter of described earnings for Tyrvaya.

Dry eye disorder happens in above 38 million People. Latest remedy possibilities are Allergan’s Restasis and Shire’s Xiidra each are presented as eye drops. Restasis is a delicate immunosuppressant whilst Xiidra is an anti-inflammatory drug. Nonetheless, specified the formulation that calls for supplying the remedies directly to the eye – usually a cumbersome and agonizing course of action – compliance is small. Also, these therapies take months to function from the onset of procedure. The business suggests there are 7 million clients that have tried out and abandoned the regular therapies.

Tyrvaya makes use of a absolutely new shipping strategy, as nicely as a exceptional mechanism of action. It is employed as a nasal fall, and it operates by triggering the trigeminal nerve which in its convert triggers tear production. In 3 scientific trials in around 1000 patients in gentle, moderate and serious dry eye ailment – ONSET-1, ONSET-2 and MYSTIC – the drug has demonstrated basic safety and efficacy. People confirmed statistically major advancements in tear film creation as assessed applying the Schirmer’s score at 7 days 4, with far more than 50% patients exhibiting optimum tear generation in contrast to about fifty percent that selection in the placebo group:

TYRVAYA-handled sufferers showed statistically major improvements in tear film creation as assessed employing the anesthetized Schirmer’s score (-35 mm) at 7 days 4. Of the individuals taken care of with TYRVAYA, 52% reached ≥10 mm improve in Schirmer’s score from baseline in the ONSET-1 research, and 47% accomplished ≥10 mm enhance in Schirmer’s rating from baseline in the ONSET-2 examine, as opposed to 14% and 28% of motor vehicle-taken care of people in the ONSET-1 review 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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