oyst-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ____________

Commission File Number: 001-39112

OYSTER POINT PHARMA, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware			81-1030955
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
202 Carnegie Center, Suite 106 Princeton, New Jersey			08540
(Address of principal executive offices)			(Zip Code)
202 Carnegie Center, Suite 109 Princeton, New Jersey			08540
(Former address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (609) 382-9032

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001

OYST

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2022, the registrant had 26,831,485 shares of common stock, $0.001 par value per share, outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Any statements contained in this Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, such forward-looking statements can be identified by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements about:

•plans relating to commercializing TYRVAYA® (varenicline solution) Nasal Spray and the Company's other product candidates, if approved, including the geographic areas of focus and sales strategy;

•the commercial success of TYRVAYA Nasal Spray and the Company’s other product candidates, once approved, and the availability and sufficiency of third-party payor coverage and reimbursement in connection with such products;

•the extent to which third-party coverage and reimbursement will be available from third-party payors, including government health administration authorities (including in connection with government healthcare programs, such as Medicare and Medicaid), private healthcare insurers and other healthcare funding organizations for TYRVAYA Nasal Spray and the Company’s other product candidates;

•the likelihood of the Company being able to maintain or obtain additional insurance coverage from additional third-party payors and expand the commercial coverage with respect to TYRVAYA Nasal Spray;

•the likelihood of the Company's clinical trials demonstrating the safety and efficacy of its product candidates, and other positive results;

•the timing of the initiation of the Company's future clinical trials, and the reporting of data from completed, current and future clinical trials and preclinical studies;

•plans relating to the clinical development of the Company's product candidates, including the size, number and disease areas to be evaluated;

•the size of the market opportunity for the Company's products and product candidates;

•the success of competing therapies that are or may become available;

•the Company's estimates of the number of patients in the U.S. and other countries who suffer from dry eye and other ophthalmic diseases, and the number of patients that will enroll in its clinical trials;

•the beneficial characteristics, safety, efficacy and therapeutic effects of TYRVAYA Nasal Spray and the Company's other product candidates;

•the timing, likelihood or scope of regulatory filings and approvals for its product candidates;

•the Company's ability to obtain and maintain regulatory approval of its product candidates;

•the Company's plans relating to the further development and manufacturing of its products and product candidates, including additional indications for which it may pursue;

•the expected potential benefits of strategic collaborations with third parties and the Company's ability to attract collaborators with development, regulatory and commercialization expertise;

•the availability or likelihood of success of any strategic collaborations with third parties for the development or commercialization of the Company’s products and product candidates;

•existing regulations and regulatory developments in the U.S. and other jurisdictions;

•the Company's plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

•continued reliance on third parties to conduct additional clinical trials of the Company's product candidates, and for the manufacture and supply of products and product candidates, components for preclinical studies and clinical trials and products and components for commercialization of TYRVAYA Nasal Spray and any additional approved products;

•the need to hire additional personnel, and the Company's ability to attract and retain such personnel;

•the potential effects of the coronavirus, or SARS-CoV-2 virus pandemic, on business, operations and clinical development timelines and plans;

•the accuracy of estimates regarding expenses, revenues, capital requirements and needs for additional financing;

•the Company's financial performance;

•the sufficiency of existing capital resources to fund future operating expenses and capital expenditure requirements, and the Company's ability to raise additional capital;

•the Company's ability to retain existing talent and attract new, highly skilled talent;

•the Company's estimates associated with the Company's plan to streamline operating expenses, including the associated reduction in force, and any resulting savings benefits the Company expects to achieve;

•expectations regarding the period during which the Company will qualify as an emerging growth company under the JOBS Act; and

•the Company's anticipated use of its existing capital resources.

The Company has based these forward-looking statements largely on its current expectations and projections about its business, the industry in which it operates and financial trends that it believes may affect business, financial condition, results of operations and growth prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, as well as Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2022. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, these forward-looking statements should not be relied on as predictions of future events. The events and circumstances reflected in the Company's forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, the Company does not plan to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

In addition, statements that “the Company believes” and similar statements reflect its beliefs and opinions on the relevant subject. These statements are based upon information available to the Company as of the date of this Quarterly Report on Form 10-Q, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and its statements should not be read to indicate that it has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

TABLE OF CONTENTS


		Page
	PART I – FINANCIAL INFORMATION
ITEM 1	Financial Statements (unaudited)	1
	Condensed Balance Sheets as of June 30 , 2022 and December 31, 2021	1
	Condensed Statements of Operations and Comprehensive Loss for the three and six months ended June 30 , 2022 and 2021	2
	Condensed Statements of Stockholders’ Equity for the three and six months ended June 30 , 2022 and 2021	3
	Condensed Statements of Cash Flows for the six months ended June 30 , 2022 and 2021	4
	Notes to Unaudited Interim Condensed Financial Statements	5
ITEM 2	Management's Discussion and Analysis of Financial Conditions and Results of Operations	19
ITEM 3	Quantitative and Qualitative Disclosure About Market Risk	30
ITEM 4	Controls and Procedures	31

	PART II – OTHER INFORMATION
ITEM 1	Legal Proceedings	32
ITEM 1A	Risk Factors	32
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	34
ITEM 3	Defaults Upon Senior Securities	34
ITEM 4	Mine Safety Disclosures	34
ITEM 5	Other Information	34
ITEM 6	Exhibits	35
SIGNATURES		36

iii

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

OYSTER POINT PHARMA, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)


	June 30, 2022		December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	104,876	$	193,372
Restricted cash	61		61
Accounts receivable, net	10,918		6,656
Inventory, net	6,645		6,086
Prepaid expenses and other current assets	10,217		9,075
Total current assets	132,717		215,250
Property and equipment, net	2,513		2,497
Investment - related party	886		886
Other assets	5,135		1,082
Right-of-use assets, net	2,684		2,902
Total Assets	$	143,935	$	222,617
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	4,720	$	6,496
Accrued expenses and other current liabilities	25,695		21,511
Lease liabilities	718		795
Total current liabilities	31,133		28,802
Lease liabilities, non-current	1,989		2,118
Long-term debt, net	91,435		89,815
Other liabilities	8,603		2,345
Total Liabilities	133,160		123,080
Commitments and Contingencies (Note 11)
Stockholders’ Equity
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized; 0 outstanding	—		—
Common stock, $0.001 par value per share; 1,000,000,000 shares authorized, 26,829,173 and 26,579,585 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	27		27
Additional paid-in capital	363,992		354,920
Accumulated deficit	(353,244)		(255,410)
Total Stockholders’ Equity	10,775		99,537
Total Liabilities and Stockholders’ Equity	$	143,935	$	222,617

The accompanying notes are an integral part of these condensed financial statements.

OYSTER POINT PHARMA, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Product revenue, net	$	4,693	$	—	$	7,397	$	—


Total revenue	4,693		—		7,397		—
Cost of product revenue	1,310		—		1,646		—
Operating expenses:
Sales and marketing	28,103		6,210		55,075		10,777
General and administrative	14,004		9,086		26,930		17,611
Research and development	4,664		6,730		9,345		12,558
Total operating expenses	46,771		22,026		91,350		40,946
Loss from operations	(43,388)		(22,026)		(85,599)		(40,946)
Other (expense) income, net
Interest expense	(3,156)		—		(6,222)		—
Other (expense) income, net	(3,398)		10		(6,013)		21
Total other (expense) income, net	(6,554)		10		(12,235)		21
Net loss and comprehensive loss	$	(49,942)	$	(22,016)	$	(97,834)	$	(40,925)
Net loss per share, basic and diluted	$	(1.87)	$	(0.85)	$	(3.67)	$	(1.58)
Weighted average shares outstanding, basic and diluted	26,744,008		25,989,913		26,688,103		25,957,186

The accompanying notes are an integral part of these condensed financial statements.

OYSTER POINT PHARMA, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share amounts)

(unaudited)


	Common Stock		Additional Paid-In Capital			Accumulated Deficit		Total Stockholders’ Equity
		Shares			Amount
Balance at January 1, 2022		26,579,585	$	27		$	354,920	$	(255,410)	$	99,537
Net loss		—	—			—		(47,892)		(47,892)
Issuance of common stock upon exercise of stock options		69,930	—			76		—		76
Issuance of common stock upon vesting of restricted stock units		20,618	—			—		—		—

Shares withheld for taxes		(7,436)	—			(87)		—		(87)
Stock-based compensation expense		—	—			4,359		—		4,359
Balance at March 31, 2022		26,662,697	$	27		$	359,268	$	(303,302)	$	55,993
Net loss		—	—			—		(49,942)		(49,942)

Issuance of common stock upon vesting of restricted stock units		37,550	—			—		—		—
Issuance of common stock under the employee stock purchase plan (ESPP)		128,926	—			541		—		541

Stock-based compensation expense		—	—			4,183		—		4,183
Balance at June 30, 2022		26,829,173	$

SEC Form 10-Q filed by Oyster Point Pharma Inc.