OYST - potential bounce off $10

[BBarna]

OYST has approached an area of significant support, from which it has strongly bounced 3 times in the past months for 40-100% increase. I’m looking for a confirmation of a bounce, or if it falls through the $9.85-$10 support level, the continuation of a long term down trend.

Earnings is coming up at the end of the month, estimated to be held on February 17. The first bounce off the $10-$11 area was before the previous earnings with a 50% increase leading into earnings, following a drop. Many in the community played it at the time for a fundamental catalyst, you can read more about it here:

OYST - Earnings & 50M Funding Closure Catalyst (November 4th)

This is a continuation of the previous thread about their FDA approval. That play didn’t go quite as expected, however, there is another emerging opportunity to lose money on this stock. You can read through the previous thread HERE OYST is a company that received recent FDA approval for their drug TYRVAYA, which is a nasal spray that treats dry eye. After the approval, the stock promptly fell from it’s height of $15 and tapped a recent all-time-low of $9. The reasoning, as we’ve come to find out, was likely because the approval did not include a specific item on the label that was required for them to get their second “tranche” of funding… 50M dollars to actually manufacture the product. So essentially, despite approval, it was looking as though they may not be able to actually produce any of the medication to sell. Thankfully, they were able to reach an agreement and filed the amendment to their financing agreement that granted them a waiver for the label stipulation on October 19th: Item 1.01 Entry into a Material Definitive Agreement. On October 19, 2021, Oyster Point Pharma, Inc. (the “Company”) entered into a waiver and amendment (the “Amendment”) to the Company’s $125 million term loan credit facility (the “Credit Agreement”) with OrbiMed Royalty & Credit Opportunities III, LP, as administrative agent and initial lender (“OrbiMed”), to waive certain labeling requirements required for, and to permit the availability of, the second $50 million tranche of funding under the Credit Agreement (among other customary funding provisions) and make certain other amendments thereto, subject to the terms and conditions contained therein. Because the label approving TYRVAYA™ (varenicline solution) Nasal Spray (formerly referred to as OC-01 (varenicline) Nasal Spray) for the signs and symptoms of dry eye disease did not include eye dryness score data from clinical trials, the Amendment was required in order for the Company to draw the second tranche and to be eligible to draw the third tranche under the Credit Agreement. The Amendment also increases the amount of principal that is required to be repaid if the Company does not meet certain minimum recurring revenue thresholds from the sale and/or licensing of TYRVAYA on a quarterly basis for the most recently ended four fiscal quarter period, from $5 million to $10 million, in the event an improper promotional event occurs. The Company delivered a notice to OrbiMed on October 19, 2021 that it intends to borrow the second tranche on November 4, 2021. The Company would also be barred from drawing the second tranche if an improper promotional event occurs prior to the funding of the second tranche. The portion that is pertinent is that they’re intending to borrow the second tranche on November 4th. Today, they announced that they also intend to present earnings that same day: Oyster Point Pharma to Report Third Quarter 2021 Financial Results on November 4, 2021 PDF Version Conference Call and Web…

If you are looking to play a potential bounce, be careful with which strike you choose, as the volume on options is low. ITM and ATM are your best choices. Previous bounces took weeks to a month to peak, going for a further out expiry is likely worth it.

[MENoir]

Will definitely be keeping an eye on this for an entry. Thanks.

[TheMadBeaker]

As mentioned this stock has extremely low volume and moves like molasses. April or July would be recommended for options (furthest available currently), otherwise shares would be safest.

This earnings they might report their initial sales with that new dry eyes treatment that got FDA approval late last year. However, again as slow as this stock moves don’t expect anything to happen on ER day.

[BBarna]

I got some shares around $10.50, have some orders in for calls, but I think it’s unlikely that I get a fill below ask.

[muhe]

went in for a lottery 12.5c 3/18 just in case it would take a month to fully take off just like last time

[TheMadBeaker]

I just looked at the chains on Friday and OI/volume is abysmal, most strikes have nothing or only single-digit action. Be very cautious about what you are paying for an option as it is unlikely to move much, and you will probably have to sell at the bid. Again, shares would be a much safer play.

Still haven’t taken a position. I missed the AM dip but would like to get shares at/below $10.50 too…

[Genti]

Call out worked well for me and took profit today (45%). Thank you @BBarna

[BBarna]

Awesome! I took a couple of 12.5s to go with my shares, looking good so far. Hoping for confirmation of reversal tomorrow.

[Genti]

@BBarna What are your current thoughts on OYST? Thinking about to re-enter.

[BBarna]

I believe my original post still stands, it is still holding support, but also has room to go down before it decides on a direction. I wouldn’t be surprised if it hovered between 10.5-11.5 for a while.

[BBarna]

Earnings release is scheduled for Feb 24.

I got out of my call position last week over a couple of days for a nice profit, but still holding shares. The $10 support has been holding well so far, but If it stays in this price range until earnings day, I may sell my shares as the risk of a less than ideal earnings pushing this below support is not worth it for me.

I’ll look into earnings expectations this week to have a better idea, and will update this post accordingly.

[BBarna]

I closed my position around $10 for a small loss on shares, but profit overall wth calls. This broke previous low, and there are more interesting plays around anyway.