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Healthcare Firm Offers US$295M for Ophthalmology Co.
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Shares of Oyster Point Pharma Inc. traded 38.5% higher yesterday after the firm reported it agreed to be acquired by Viatris Inc. for US$11.00 per share along with a contingent value right for a potential additional payment of up to US$2.00 per share.

Ophthalmology-focused biopharmaceutical company Oyster Point Pharma Inc. (OYST:NASDAQ), yesterday announced that it entered into a definitive agreement to be acquired by Viatris Inc. (VTRS:NASDAQ) in an all-cash transaction for US$11.00 per share.

Oyster Point Pharma is a commercial-stage biopharma firm that is focused on developing and commercializing therapeutics for use in the treatment of eye diseases.

The firm has developed a multidose nasal spray formula called TYRVAYA® (varenicline solution) that, in October 2021, received approval from the U.S. Food and Drug Administration (FDA) for use in treating the signs and symptoms of dry eye disease.

According to the report, Viatris' elected to pursue the purchase of Oyster Point Pharma to form the foundation of its new and growing ophthalmology franchise. Viatris' interest is multifaceted, and in addition to gaining the rights to Oyster Point's TYRVAYA® (varenicline solution) Nasal Spray, it hopes to benefit from the addition of Oyster's uniquely talented staff and other assets and programs in Oyster Point's product development pipeline.

Through a tender offer process, Viatris has agreed to buy all of Oyster Point Pharma's outstanding shares at a price of US$11.00 per share in cash.

In addition, the firm will pay existing Oyster Point common shareholders a contingent value right (CVR) of up to US$2.00 per share if specified performance objectives are met by Oyster Point Pharma for FY/22.

The final value of the CVR will be based on commercial sales derived from TYRVAYA during FY/22. If net product revenues from TYRVAYA are US$21.6 million or higher and at least 131,822 total prescriptions are issued, the CVR will be for good for an additional US$1.00 per share in cash.

In the event that net product revenues come in higher at US$24.0 million or more and over and 146,469 total prescriptions are written, then the CVR will include an additional US$2.00 per share in cash.

Therefore, if all the conditions associated with the CVR are met, based on 26.83 million total shares outstanding, the transaction would be valued at approximately US$348.79 million.

Viatris' CEO Michael Goettler remarked, "Oyster Point Pharma brings to Viatris the strength of TYRVAYA Nasal Spray, the first and only FDA-approved nasal spray for dry eye in the U.S., an eye care focused pipeline, and a very experienced team that possesses extensive knowledge of the ophthalmology space from a clinical, medical, regulatory and commercial perspective."

Oyster Point Pharma's President and CEO Jeffrey Nau, Ph.D., MMS, commented, "We are pleased to announce Viatris' proposed acquisition of Oyster Point Pharma, recognizing the exciting opportunities that lie ahead of us . . . With Viatris' global capabilities and commitment to ophthalmology, we expect to be able to expand TYRVAYA's impact on the dry eye landscape and accelerate our exciting pipeline.

With our combined sector expertise, innovation, scale, pipeline, and global commercial reach, we expect to build a world-class ophthalmology business to meaningfully shape the future of eye care to the benefit of patients."

Therefore, if all the conditions associated with the CVR are met, based on 26.83 million total shares outstanding, the transaction would be valued at approximately US$348.79 million.

The report indicated that Oyster Point Pharma's Board of Directors has already unanimously approved the transaction, which is expected to close in Q1/23. The transaction remains subject to approval by Oyster Point shareholders, ordinary closing conditions, and regulatory approval.

The report stated that a block of current Oyster Point Pharma stockholders, who in aggregate hold about 46% of Oyster Point's outstanding shares, have agreed to tender all their respective shares in support of the agreement with Viatris.

The firm described TYRVAYA® (varenicline solution) Nasal Spray 0.03 mg as "a highly selective cholinergic agonist that is FDA-approved to treat the signs and symptoms of dry eye disease as a multidose nasal spray."

The company stated that dry eye disease is a chronic condition that is increasing in prevalence. The multifactorial ocular surface disease affects approximately 38 million people in the U.S. and is characterized by numerous persistent symptoms, which may include blurred vision, burning sensations, eye fatigue, scratchiness, sensitivity to light, and stinging sensations due to disruption of the tear film.

Oyster Point Pharma is a commercial-stage biopharma firm based in Princeton, N.J. The company is engaged in discovering, developing, and advancing medicines for use in treating ophthalmic diseases.

The firm's leading asset is TYRVAYA® (varenicline solution) Nasal Spray, for which the company received approval from the U.S. FDA in October 2021 for use in the treatment of dry eye disease. The firm is presently investigating TYRVAYA in a Phase 2 clinical study as a potential treatment for neurotrophic keratopathy.

Oyster Point began the day yesterday with a market cap of around US$224.0 million, with approximately 26.8 million shares outstanding and a short interest of about 6.3%. OYST shares opened 38% higher yesterday at US$11.56 (+US$3.21, +38.44%) over Monday's US$8.35 closing price. The stock traded between US$11.52 and US$11.83 per share and closed for trading at US$11.57 (+US$3.22, +38.56%).

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