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

Catrina P. Smith

Extreme close up eye and eyelashes

Jonathan Knowles/DigitalVision by way of Getty Images

Oyster Level Pharma, Inc. (NASDAQ:OYST) has an accredited product or service, Tyrvaya (OC-01, varenicline option) Nasal Spray for treating dry eye sickness, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a scarce disease characterized by reduced corneal sensitivity and weak corneal therapeutic. For the pipeline program, the business suggests in its earnings call:

We carry on to enroll people in our OLYMPIA Phase 2 review of OC-01 nasal spray aimed at treating Stage 1 NK. We continue to be on monitor to assume effects of this trial in the second 50 percent of this yr.

Now, coming to the approval, Tyrvaya was accepted in October 2021 and started out in the marketplace by early November. So this was effectively the very first entire quarter of claimed earnings for Tyrvaya.

Dry eye condition happens in above 38 million Us residents. Recent therapy choices are Allergan’s Restasis and Shire’s Xiidra both of those are given as eye drops. Restasis is a delicate immunosuppressant when Xiidra is an anti-inflammatory drug. Even so, presented the formulation that needs giving the remedies directly to the eye – normally a cumbersome and unpleasant procedure – compliance is minimal. What’s more, these therapies get months to perform from the onset of treatment method. The corporation suggests there are 7 million clients that have tried using and abandoned the normal therapies.

Tyrvaya utilizes a totally new shipping strategy, as effectively as a unique mechanism of motion. It is utilized as a nasal fall, and it functions by triggering the trigeminal nerve which in its switch triggers tear creation. In 3 medical trials in in excess of 1000 people in mild, reasonable and serious dry eye ailment – ONSET-1, ONSET-2 and MYSTIC – the drug has demonstrated basic safety and efficacy. Sufferers confirmed statistically sizeable advancements in tear movie creation as assessed working with the Schirmer’s rating at Week 4, with extra than 50% clients showing ideal tear creation in contrast to about half that variety in the placebo group:

TYRVAYA-handled patients showed statistically significant enhancements in tear movie output as assessed working with the anesthetized Schirmer’s rating (-35 mm) at Week 4. Of the sufferers handled with TYRVAYA, 52% realized ≥10 mm improve in Schirmer’s rating from baseline in the ONSET-1 study, and 47% attained ≥10 mm increase in Schirmer’s score from baseline in the ONSET-2 analyze, as opposed to 14% and 28% of vehicle-handled individuals in the ONSET-1 review and the ONSET-2 analyze, respectively at 7 days 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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