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

Oyster Stage Pharma, Inc. (NASDAQ:OYST) has an authorised solution, Tyrvaya (OC-01, varenicline solution) Nasal Spray for treating dry eye ailment, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a rare disease characterised by lessened corneal sensitivity and very poor corneal therapeutic. For the pipeline program, the company says in its earnings phone:

We carry on to enroll clients in our OLYMPIA Period 2 review of OC-01 nasal spray aimed at managing Phase 1 NK. We continue to be on keep track of to anticipate outcomes of this demo in the 2nd 50 percent of this year.

Now, coming to the acceptance, Tyrvaya was approved in October 2021 and commenced in the marketplace by early November. So this was effectively the to start with comprehensive quarter of claimed earnings for Tyrvaya.

Dry eye disorder takes place in in excess of 38 million People. Latest treatment method alternatives are Allergan’s Restasis and Shire’s Xiidra equally are specified as eye drops. Restasis is a gentle immunosuppressant although Xiidra is an anti-inflammatory drug. Even so, offered the formulation that involves giving the medicines immediately to the eye – often a cumbersome and unpleasant method – compliance is small. In addition, these therapies get months to operate from the onset of cure. The enterprise suggests there are 7 million sufferers that have attempted and abandoned the common therapies.

Tyrvaya works by using a entirely new shipping and delivery strategy, as perfectly as a distinctive system of motion. It is utilised as a nasal fall, and it operates by triggering the trigeminal nerve which in its transform triggers tear manufacturing. In 3 clinical trials in around 1000 sufferers in gentle, reasonable and serious dry eye sickness – ONSET-1, ONSET-2 and MYSTIC – the drug has shown security and efficacy. Patients showed statistically substantial advancements in tear film production as assessed using the Schirmer’s score at Week 4, with much more than 50% individuals exhibiting optimal tear generation in comparison to about fifty percent that range in the placebo team:

TYRVAYA-addressed people confirmed statistically important improvements in tear movie production as assessed working with the anesthetized Schirmer’s score (-35 mm) at 7 days 4. Of the individuals dealt with with TYRVAYA, 52% attained ≥10 mm boost in Schirmer’s score from baseline in the ONSET-1 review, and 47% realized ≥10 mm enhance in Schirmer’s rating from baseline in the ONSET-2 research, compared to 14% and 28% of motor vehicle-addressed sufferers in the ONSET-1 analyze and the ONSET-2 review, 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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