Of the Citizens Life Science Conference. My name is John Walden, Senior Analyst here. We're pleased to have Skye Bioscience and Punit Dhillon, CEO, joining us to tell us a little bit about the story. Skye Bioscience, we initiated coverage on just a little while ago, but this is a name that I think is underappreciated in the obesity space, going after a relatively novel—not novel mechanism, but way less crowded space with some differentiation. As that is a setup, Puneet, maybe tell us at a high level what you guys are doing at Skye Bioscience, and then we can jump into some details.
Yeah, thanks again, John Walden. It's been a pleasure to be here and appreciate everyone at the conference. Obviously, it's been an interesting first half of the year, but we continue to be really focused on our mission. The company's focused on metabolic disease, obesity, and our lead indication is obesity with the CB1 inhibitor that we're developing. It ends up really being a hugely differentiated approach, like you said. One is just the biology makes a lot of sense. It's been demonstrated to be a validated mechanism. If you think beyond all of the kind of information that's thrown at us in the incretin space, I think we understand that that class is doing really well. The market certainly is recognizing that that is a standard of care that is starting to make a difference for patients.
If you dig into it, and that's what we've been doing, and that's been a part of our thesis from day one of developing this particular drug, there's still an unmet need associated with those patients that come off of those incretin drugs. That's where this ends up being a really interesting biologic modality that's independent of the GLP-1 pathway that we think becomes an incredibly important mechanism to rely on as a backbone. We're assessing that not only as a monotherapy in terms of our development plan, but also as a combination in terms of the study that we're working on. Overall, the plan in terms of just how we are focused on value creation with CB1 and the mass development is that our job here is to get that across the finish line as fast as possible.
You'll see our development plan take shape after we have data this year. The other is continuing to work on a pipeline expansion that looks at a pipeline of a CB1 plus story where the mass is the backbone, and there can be other combinations that make sense to that. Another important part of our ethos in this environment has been really disciplined capital allocation, as well as understanding our cap table is very unique. We have some of the best investors in the world that have backed us. At the same time, we're a relatively small company relative to our peer group, but that puts us in a unique spot in terms of just being very focused and responsible in terms of how we're navigating through the present period.
We're continuing to focus on execution, continuing to focus on developing the nimacimab, and we have approximately two years of cash. It puts us in a spot where we can think about things methodically and not go too aggressive in terms of spend relative to all the other things that are in front of us. It is a unique period, but I think we're in also a good place to take advantage of that where there could be a lot of value unlocked once we show data.
Can you tell us a brief history about CB1 inhibitors and weight loss? How do they work? Because if people have long enough memories, they might remember these and be worried. Tell us what happened and why the nimacimab is different.
Yeah, so if you go back in history, the class has been around. There was a previous—let's call them first generation CB1 inhibitors that were developed, small molecules. Sanofi had the most success with rimonabant. They actually got it approved in 2006 in Europe. Unfortunately, it was pulled off in 2008 when the FDA didn't give it approval due to safety concerns, neuropsychiatric adverse events, unfortunately severe, including depression and in some rare cases, suicide ideation. It was focused on CB1 inhibition centrally and peripherally, and the central inhibition is what engaged this negative side effect. Fast- forward, there was still a lot of science in terms of application of whether you can peripherally restrict these small molecules. Move to present day, and we have now small molecule peripherally restricted small molecules in development, most notably in M onlunabant, which is being developed by Novo Nordisk.
Skye Bioscience is developing an antibody, a different mechanism. We're differentiated in terms of how that is targeting the receptor and engaging the receptor relative to the small molecules, but it's also really important to differentiate that the antibody approach has been able to show a really exquisite peripheral restriction relative to the small molecule. You'll see, I think we had data on this late in 2024 where we showed side-by-side PK relative to the second generation small molecule, as well as we compared it against rimonabant, and it showed that essentially the nimacimab is about 600-fold below IC90 in the brain. We're not even coming close to that.
Of course, you're going to have this ongoing debate whether you need to have some activity in the brain in order to drive caloric restriction or drive this element of this pathway in order to have weight loss. Our thesis really is demonstrating that the peripheral engagement of the receptor and saturation of the receptor in all of the other tissue, especially adipose tissue, hepatic tissue, it's driving lipogenesis. It's a really important pathway to really still have significant, meaningful weight loss, and indirectly you're able to target these other hormones that are appetite regulating.
Mechanistically, how are people losing weight through CB1 inhibition peripherally?
Yeah, so I think the simplest way is we're focused on fat metabolism. We're targeting fat, fat converting to energy. There is this lipogenesis that we're seeing. That is the key pathway. Through that pathway, though, you're also recognizing that this is a coordinated metabolic effect. By focusing on adipocytes, you are improving the sensitivity around leptin, which is an appetite regulating hormone. Through the focus on CB1 inhibition in the muscle, you're helping with glucose regulation. There's an insulin sensitivity component. There is a multitude of different kinds of activities that are happening, and that's why we think that there's a broad kind of rewiring that's happening and resetting that happens with targeting CB1 in the periphery.
Key mechanism here is that we're still focused on weight loss, still focused on fat metabolism, unlike the incretins that are focused on a more caloric restriction and an exogenic pathway. That's what we think is critical in this landscape. In the obesity landscape, the world has only been dominated by the seven drugs that are approved right now, have all been focused on caloric restriction. There is an up-and-coming class of peripherally driven mechanisms that could be very additive and supportive of chronic therapy. Look at the hypertension market. The hypertension market, most patients are taking these oral small molecules. They're basically trying to prevent and hedge themselves against any cardiac risk in the future. In weight loss, you're looking for an acute effect. You can see those changes over time.
First, obviously, you can weigh yourself and you can see that difference, but other metabolic changes as well, triglyceride, A1C, all these other parameters and biomarkers come into play. This is where we think that in weight loss, the paradigm is going to continue to shift. If we recognize that this is going to be a chronic treatment, which a lot of people, I think, still are trying to—not everyone has grasped that. Unfortunately, weight loss drugs or anti-obesity medications over the last two years have been relegated towards kind of short-term weight loss or people coming on and off. It could be because of supply and demand. It could be because of how it's been influenced by celebrities and other aspects. At the end of the day, these medicines are given to patients with the intent of chronic therapy.
The chronic therapy over long- term with an increment has been a challenge. We've seen at the nine-month mark, over 50% of patients discontinue those drugs for a variety of different reasons. Either they can't tolerate them, they're not responding, there's other factors in terms of safety or other concerns, or they just stop working. Once they come off those types of therapies, there's also a rapid rebound. This is where we believe that nimacimab, as well as maybe others, have a really solid footing in terms of tackling that population, the maintenance population, for instance. At the end of the day, CB1 inhibition, coming back to the relevance of it, it's the only other validated mechanism in the landscape.
What about amylin agonism?
Amylin would be the other one I would point to. I pointed this out in January as well. At that point at J.P. Morgan, I was like, "Look, there's two mechanisms that are going to get a lot of noise this year. It's going to be amylin and it's going to be CB1." Amylin, because there were some good data readouts and there were some good deals that happened in the first- half. Amylin, I still put into the category almost mechanistically as an increment, because it's focused on similar types of pathways. [Inaudible] .
Yeah, there's caloric restriction.
Yeah, there's caloric restriction, whereas CB1 is really exciting in terms of targeting peripheral-driven fat metabolism. I mean, the best situation would be that what if we can take a drug that you can still basically maintain your caloric maintenance, but you have increase of energy expenditure.
It seems like almost you're cheating the biology at that point.
Yeah, yeah. I mean, that would be—I mean, it's true.
I can have my Sunday and lose weight.
Yeah. The way we've kind of oversimplified it is that incretins almost work like a diet pill.
You have exercise.
Yeah, yeah. We have the exercise equivalent. Diet has been around for a long time, even before anti-obesity medications. Diet has been the way that people are trying to focus on losing weight. We all know diets rarely ever work, or if they work, they take an incredible amount of discipline. Exercise is the other factor here. Look at even the way that the landscape has evolved. Even if you're taking any anti-obesity medication, it's prescribed to be alongside of diet and exercise. Just like how the landscape is evolving, that part of it has to be kind of, I think, a factor here that combinations like diet and exercise types of mechanisms are going to be what are important. Underneath that is literally diet and exercise as well.
Can you talk a little bit about the data you guys have generated that support kind of this thesis on CB1 inhibition? You talked a little bit about those neuropsychiatric adverse events. I think you guys have the best opportunity to mitigate that risk to almost zero, but you've got data in humans now. Talk about what you guys have shown to date.
Yeah, so there's two parts to that. Obviously, the preclinical story has come a long way. If you go through the Skye deck now and the information that the R&D team has been putting together, it talks about the nimacimab differentiation across multiple assays and CB1 inhibition. We're talking now in terms of very clear PK comparisons against small molecules. Most recently, this DIO model that Chris Twitty and his team have been putting effort into has continued to evolve. Most recently, we presented combo data with tirzepatide from that model. The preclinical story is always helpful because it's supportive of what hopefully translates into a more likely outcome in terms of translating into the clinic. On the clinical side, there has been a really strong body of evidence in terms of the safety side.
On the neuropsychiatric concern or CNS or central compartment type of activity, we have multiple biodistribution studies that show that we stay out of the central compartment in NHPs. We have phase I data. It's a smaller study. It's a smaller duration, but there were zero neuropsychiatric adverse events. When you look at that side by side against small molecules, I think it's something that we feel comfortable hanging our hat on initially because it's a good benchmark because the small molecules at four weeks, unfortunately, showed neuropsychiatric adverse events. Now this longer duration study that's underway, the 26-week study that we recently announced we're extending by another 26 weeks to look at long-term safety and efficacy is going to be the key factor.
I don't want to cut you off, but I want to talk about CB1 because I think you probably have the best designed phase II trial in the obesity space. Can you lay out what you guys are doing?
Yeah, so thanks for acknowledging that. I mean, we did deliberately approach that study with the intent that we.
We're going to get every answer we want.
Yeah, we need to get this answer, and we're not going to beat around the bush around how we want to approach this development strategy. If this data is good, it's going to give us a lot of the information to go to the agency and drive towards what our phase IIb and hopefully phase III plan looks like. Coming back to the study design, it's a four-arm study. It's a double-blind placebo-controlled on the monotherapy side. We're looking at the nimacimab compared to placebo. In those arms, it's 40 patients each arm. In addition to that, we also have a nimacimab plus Wegovy, so GLP-1 and a Wegovy alone arm as well.
We get a chance to see across all four arms the weight loss against each parameter that you would want to look at, obviously a placebo control, but also to see the activity in the combo setting and against monotherapy GLP-1 alone. I think it covers our basis. The secondary endpoints are obviously safety, and we're looking at body composition. Then there's some exploratory endpoints as well that we're looking at, which include biomarker. There's a sleep study that we're doing in there. We're also doing a PK analysis on 25% of the patients. We do collect a lot of the information that we think is going to be important. At this point, in our March guidance and earnings, as you know, we took out the interim analysis, and we're just focused now on top-line data, late Q3, early Q4.
We've finished enrollment in the study, and that data is on track in terms of that guidance that we've given. We basically were able to move that top-line time point from late Q4 to an earlier, like about three months.
What do you want to show in terms of weight loss? Because that's really what moves the needle. This conversation has evolved. I think we're early to it in maybe this might have been 1988, 2023, when we saw the first read of TrueTide data. We were like, "We don't need all of this." I think people are coming around to that thesis, but talk about what you want to see, what's enough, and then will people care?
Yeah, so that's a great question. It's a billion-dollar question. In 2024, if you asked us that, we were really reluctant to throw out numbers, even though we've designed a program to show a particular endpoint. After this orphoglyperon data, it highlights that it seems to be that the market's finally starting to appreciate the broader range of weight loss that's meaningful in the different AOMs that are available. If there's already AOMs that are doing the job 20%+ , you don't need to have more of those necessarily unless other mechanisms are important. We feel that the way to kind of crack that market is looking at how the combination can be additive or you can improve tolerability on those existing mechanisms. Coming back to your question, we want to see a really strong separation between placebo and active.
We think that above 5% at 26 weeks is a very competitive, meaningful, and significant amount of weight loss, especially if we're looking at seeing how those curves look at 26 weeks. Now with this extension, we can also evaluate what that long-term looks like. That's what we're looking at in the monotherapy. There's not really much to rely on in terms of a precedent to come up with a number. We are literally pulling numbers out of the air to differentiate ourselves. Because if you go back to rimonabant data, the 26-week data was around the same. The 52-week data was approximately 10%. When we came up with our study design, that was prior to tirzepatide data coming out with 16-week data. Their 16-week placebo-adjusted data was 5.7%. I think, and then if you look at GLP-1, 16 weeks is also around 5%.
I think the oral semaglutide is about 5%. So we think 26 weeks, having that clear separation above 5% is a meaningful number, especially if those curves look like they're continuing to.
Do you think how do people interpret if you don't have comparable or more weight loss than semaglutide and CB1? Do you think you will, or what are your expectations? You've looked at this preclinically. Does it translate?
Yeah. The preclinical evidence has been really, really exciting. It always gives a lot of confidence when we've been able to now show and repeat models that significant weight loss. That's very comparable across these different drugs and these different types of drug classes. What gets me most excited is that it's happening because of a different mechanism. It's independent of the GLP-1 pathway. That is why I think that number is really important. Because if you can have comparable weight loss, or let's just say based on what we've seen in studies, and it's coming at it completely different in terms of a mechanism, a peripherally driven mechanism, that's fantastic. Because now you've just opened up the armamentarium for obesity doctors or patients to be able to rely on something else.
Now, couple that, we're going to have more information on this this year, but we've just finished about 60 interviews with obesity doctors across the country and also in Canada. We've started to rely on some other tools that give us some real-world data. It's fascinating looking at the real-world data. I don't want to jump because we're going to try to present this later this year. I'll just say that those numbers that we're looking at are still better than what the real-world data shows.
You mentioned monlunabant as a benchmark or a goal, but Novo Nordisk put out that data and lost $20 billion in value and market cap that day. Was that due to higher expectations, the weight loss not matching, safety, all the above? Obviously, the market was not happy. What were they not happy about? How do you guys avoid that? How do you get some of that value that people obviously were excited about the CB1 inhibitor?
Yeah, so look, my first reaction there was that it was an overreaction. I think that it was unfortunate. From an efficacy stand-point, that data was really great. I think that if people looked at it purely from the efficacy stand-point at 16 weeks, it is a very competitive number to what we've seen across a multitude of different studies. In fact, it's probably one of the in the top quartile in terms of efficacy. The issue there, I think, was driven by two factors. One, a very confusing IR strategy in terms of what the expectation setting was around that data, as well as confusion around what a 16-week time point data looked like versus what a 52-week time point data looked like. I think even your coverage kind of highlighted this unclarity that executives at Novo Nordisk were setting expectations.
How does the street interpret that? They might have looked at that and said, "Okay, no, that was that 52-week guidance that we were supposed to be interpreting, and now these guys came under." I think that that was really confusing. The second factor, which was actually the more important one, is that everyone was betting on the fact that these second-generation drugs are going to alleviate the safety concern. Here, again, you saw a press release that showed a dose-dependent increase in adverse events, in neuropsychiatric adverse events. That did put a damper in terms of the class. On the flip side, the positive here is that they believe they're going to manage through that. I think everybody was paying close attention to yesterday's earnings to see if they would highlight anything.
We saw that they didn't mention anything other than they mentioned that they're continuing to, on the slides, they mentioned that they're continuing to develop. That's a positive sign. Again, for Skye Bioscience, it's always been something that we've tried to look at in our calculus because we were aware of that asset before we acquired the nimacimab. We were familiar with the data. We looked at that rigorously. We always had this concern of neuropsychiatric adverse events with small molecules, and we purposely stayed away from that and went after acquiring the nimacimab and developing the nimacimab. For us, it's never been a concern. We're happy that they're continuing to develop it. Frankly, we have, I think, a lot of differentiation and an advantage with that differentiation over the small molecules.
We have data from your phase two study coming, late Q3 , early Q4 . Can you just remind us? I know you guys are going to be giving an update after the market closed today, but cash position and runway?
Yeah, the earnings is today. Our guidance isn't changing at the moment. Right now, it's Q1 2027 is when we expect to have our cash runway. Again, we're also being very thoughtful through this period. From a business standpoint, we do have the ability to extend that. That Q1 2027 guidance is based on full gas pedal to move forward our nimacimab development strategy without having much white space in between clinical trials. That means we're spending the money on our drug manufacturing and scale-up and all that stuff to continue our timelines in terms of drug and future studies. In terms of milestones, the key clinical milestones is really the top-line data that's coming from the current two A study. That's going to be late Q3, early Q4.
2025 continues to be an overall, call it a data-rich year for us because we have more preclinical information that continues to support what we're doing clinically. Even the clinical study has kind of multiple things that we're looking at, including the biomarker work. I know all eyes are on the top-line data, obviously, and the safety profile of the drug. That's what we're focused on.
It'll be an exciting year. I think everyone's excited to see the data later this year. All the updates between now and then will give us a little bit more appetite to think about, pardon the pun. Punit Dhillon, thank you so much for walking us through the story today. I really appreciate it.
Thanks, John Walden. Appreciate it.