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Jonathan Knowles/DigitalVision by way of Getty Visuals

Oyster Stage Pharma, Inc. (NASDAQ:OYST) has an permitted item, Tyrvaya (OC-01, varenicline option) Nasal Spray for dealing with dry eye disease, and it is also in the pipeline for Neurotrophic Keratopathy Phase 1. NK is a scarce condition characterized by decreased corneal sensitivity and poor corneal healing. For the pipeline plan, the organization states in its earnings phone:

We continue on to enroll patients in our OLYMPIA Period 2 analyze of OC-01 nasal spray aimed at dealing with Stage 1 NK. We stay on monitor to hope outcomes of this trial in the second 50 percent of this year.

Now, coming to the acceptance, Tyrvaya was authorised in October 2021 and commenced in the marketplace by early November. So this was proficiently the to start with total quarter of documented earnings for Tyrvaya.

Dry eye condition occurs in over 38 million Individuals. Latest treatment selections are Allergan’s Restasis and Shire’s Xiidra each are presented as eye drops. Restasis is a moderate immunosuppressant although Xiidra is an anti-inflammatory drug. Even so, presented the formulation that involves giving the medications instantly to the eye – normally a cumbersome and distressing method – compliance is reduced. What’s more, these therapies get months to do the job from the onset of procedure. The corporation states there are 7 million individuals that have tried and abandoned the regular therapies.

Tyrvaya employs a wholly new delivery method, as well as a distinctive system of motion. It is utilized as a nasal drop, and it operates by triggering the trigeminal nerve which in its flip triggers tear creation. In 3 clinical trials in above 1000 individuals in delicate, reasonable and serious dry eye disorder – ONSET-1, ONSET-2 and MYSTIC – the drug has demonstrated safety and efficacy. People confirmed statistically important enhancements in tear film output as assessed utilizing the Schirmer’s score at Week 4, with more than 50% clients exhibiting exceptional tear output in contrast to about 50 percent that quantity in the placebo team:

TYRVAYA-taken care of individuals showed statistically important improvements in tear film generation as assessed applying the anesthetized Schirmer’s score (-35 mm) at Week 4. Of the patients addressed with TYRVAYA, 52% obtained ≥10 mm improve in Schirmer’s score from baseline in the ONSET-1 review, and 47% reached ≥10 mm raise in Schirmer’s score from baseline in the ONSET-2 review, in comparison to 14% and 28% of auto-treated individuals in the ONSET-1 analyze and the ONSET-2 review, 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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