Earnings call transcript: Skye Bioscience's Q3 2025 reports promising drug study

Skye Bioscience reported its Q3 2025 results, highlighting a net loss of $12.8 million. Despite this, the company showcased promising results from its Nemesimab phase 2A study. The stock remained stable, with no significant movement in pre-market trading.

Key Takeaways

• Skye Bioscience ended Q3 2025 with $35.3 million in cash and cash equivalents.
• R&D expenses nearly doubled year-over-year, reaching $9.4 million.
• Nemesimab phase 2A study showed positive weight loss results.
• No neuropsychiatric side effects observed in combination therapy.
• Plans for a phase 2B study and potential maintenance therapy indication.

Company Performance

Skye Bioscience's Q3 performance was marked by increased investment in research and development, reflecting its focus on advancing Nemesimab. The company's innovative approach in the obesity treatment market, particularly its peripheral CB1 antibody, positions it uniquely against competitors. Despite the net loss, the promising results from the Nemesimab study could enhance its competitive edge.

Financial Highlights

• Cash and cash equivalents: $35.3 million
• R&D expenses: $9.4 million, up from $4.9 million YoY
• General and administrative expenses: $3.9 million, down from $4.6 million YoY
• Net loss: $12.8 million

Outlook & Guidance

Skye Bioscience plans to initiate a phase 2B combination study targeting higher doses in monotherapy. The company aims to present data at scientific conferences in 2026 and is considering a 52-week treatment study for a potential maintenance therapy indication.

Executive Commentary

CEO Puneet Dhillon emphasized the synergistic efficacy of Nemesimab with semaglutide, stating, "We believe that we really have an interesting opportunity for Nemesimab to aggressively pursue a maintenance indication." Dr. Arora, a medical expert, highlighted the safety profile, saying, "The psychiatric events have been a source of trouble. I think they're really enthusiastic about the idea that you can get these effects and get them in a safe and tolerable manner."

Risks and Challenges

• Increased R&D expenses could impact short-term financial stability.
• Regulatory hurdles for new drug approval.
• Competitive pressure in the evolving obesity treatment market.
• Potential safety concerns at higher drug doses.
• Economic factors affecting healthcare budgets.

Q&A

During the earnings call, analysts questioned the exposure-response relationship and potential for maintenance therapy. Safety concerns at higher doses were addressed, and the characteristics of weight rebound were explained, providing insights into the company's strategic planning and focus on patient safety.

Full transcript - Skye Bioscience Inc (SKYE) Q3 2025:

Speaker 3: Ladies and gentlemen, thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Skye Bioscience Q3 2025 financial results and business update call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the conference over to Bernie Hertel, Head of Investor Relations. Please go ahead.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Hello, and thank you all for participating in today's call. Before we begin, I'd like to caution that comments made during this conference call will contain forward-looking statements under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements about Skye's expectations regarding its development activities, timelines, and milestones. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially and adversely, and reported results should not be considered as an indication of future performance. These forward-looking statements speak only as of today's date, and the company undertakes no obligation to revise or update any statements made today. I encourage you to review all of the company's filings with the Securities and Exchange Commission concerning these and other matters. I'll now turn the call over to Kaitlyn Arsenault, Skye's CFO.

Kaitlyn Arsenault, CFO, Skye Bioscience: Thanks, Bernie. After the market closed today, we issued a press release and filed Skye's Form 10Q with the Securities and Exchange Commission, outlining our quarterly financial results. We encourage you to reference our filings for the details of our financials and the risk factors described therein. I will now provide a brief overview of our key financial results for the Q3 ended September 30, 2025. We ended the Q3 with cash and cash equivalents and short-term investments totaling $35.3 million. We expect our current working capital to fund operations and key clinical milestones into 2027. This includes the completion of the extension of our phase 2A study for Nemesimab and certain manufacturing and preparatory clinical activities needed to initiate the next study.

In addition, our runway continues to include a modest discovery R&D budget and the dose concentration and process intensification work required to support our expected TPP and scale and support later-stage studies for Nemesimab. R&D expenses for the three months ended September 30, 2025, were $9.4 million as compared to $4.9 million for the same period in 2024. The increase was primarily due to contract manufacturing, clinical trial costs associated with our obesity study for Nemesimab, discovery R&D expenses, salary and stock-based compensation expense, and consulting, advisory, and professional fees. General and administrative expenses for the three months ended September 30, 2025, were $3.9 million as compared to $4.6 million for the same period in 2024. The decrease was primarily related to decreases in consulting, advisory, and professional fees, recruitment fees, salaries, and stock-based compensation expense.

Our net loss for the three months ended September 30, 2025, totaled $12.8 million, including non-cash share-based compensation expense of $1.9 million, compared to $3.9 million for the same period in 2024, with non-cash share-based compensation expense of $1.9 million. Now, I'll turn the call over to our President and CEO, Puneet Dhillon.

Puneet Dhillon, President and CEO, Skye Bioscience: Thanks, Kate. Today and during this quarter and the subsequent quarters, we're really focused on what matters most: turning the answers from our CBON study into the logical next steps. We're going to walk you through what we've learned from our phase 2A CBON study so far and how that data has really sharpened our focus, maintained our focus on our clinical path, and strengthened our conviction in the Nemesimab opportunity. From the start, we said that the next step for Nemesimab would be to determine an optimal dose for Nemesimab. To that end, the top-line data from the phase 2A study provided us with a wealth of information that we continued to mine for further insights.

Most importantly, it gave us evidence in the biological activity of Nemesimab and the clarity on the PK to move forward confidently on our combination development pathway while simultaneously planning to further understand Nemesimab's benefit in a monotherapy setting. On today's call, we'll walk you through the progress that we've made over the past 90 days, the data that we've generated, and the path that we're really focused on in terms of charting forward. We're going to cover four key areas today. One is clinical development, specifically what we've learned from the CBON study, how those insights are shaping the potential for future next studies. Number two is CMC and product economics, how we're designing Nemesimab for scalability and long-term market penetration.

Number three is R&D and the work we're doing there, the science that continues to validate that peripheral CB1 antibody, and, sorry, the Nemesimab, our peripheral CB1 antibody, is differentiated and it's a durable mechanism. Four, the continued emphasis on just really strong accountability and consistency, how our actions this quarter measure against what we said that we would deliver. I'm going to conclude with an outline of what's next, a look ahead at the key milestones and the catalysts over the coming 90 days. First, let's get into the clinical development. We'll start with what we said last quarter and where we are now. In Q2, we committed to three different things. One was deliver top-line data in Q4 from CBON. Two was to use that data set to inform the dose ranging strategy for the next clinical phase.

Three, maintain operational and regulatory milestones and readiness to move efficiently into the next study. We have delivered on each one of those commitments. At Obesity Week last week, Dr. Louis Aronne presented the late-breaking results from CBON, and the findings are both clear and very encouraging. We showed synergistic efficacy with Nemesimab plus semaglutide and achieved an additional approximately 3% weight loss at 26 weeks compared with semaglutide alone. This was with a p-value of 0.0372 on a modified intent to treat population. That is nearly a 30% improvement with this combination, with no observed plateau at 26 weeks. We also showed quality of weight loss, that the combination of Nemesimab and semaglutide improved lean-to-fat mass ratio of 0.26 versus 0.13, with a p-value of 0.0126, and reduced waist circumference by an additional 3.17 centimeters, with a p-value of 0.0492.

We also showed durability that in the 12-week post-treatment follow-up, Nemesimab plus semaglutide blunted weight regain with only an 18% regain, or 2.3 kilograms, versus 50% regain, or 4.7 kilograms, on the semaglutide alone, and that's with a p-value of 0.006 versus placebo. The safety signal has also been very positive. There's been no neuropsychiatric signal and no additive GI burden. This overall data really confirms that Nemesimab is biologically active, clinically meaningful in combination, and exceptionally well tolerated. They validate our long-held view that the mechanism is sound and that the value now lies in refining, really, the dose to unlock the Nemesimab true efficacy window and fully capture the therapeutic potential of a peripheral CB1 antibody. Additionally, in September, we completed enrollment of the 26-week extension study. A total of 43 patients were enrolled, with 19 and 24 patients in the combination and monotherapy cohorts, respectively.

Retention in the extension study has been very strong, and the data from the 26-week extension study is expected in late Q1, early Q2 of 2026, and will provide information on the potential for full treatment duration of 52 weeks, followed by a 12-week follow-up period. This long-term follow-up from the extension will be a new inflection point with a richer data set and a more complete understanding of Nemesimab's clinical potential. In parallel, we're going to continue moving up the dose. The monotherapy extension study is evaluating a slightly higher dose, where we've stepped it up from 200 milligrams to 300 milligrams weekly, but our current plan is to even go higher. Analysis of our preliminary PK/PD model showed that patients achieving higher systemic levels of Nemesimab corresponded with a greater weight loss, and that aligns with the range where we expect to show clinically significant results.

Our PK/PD model, based on the clinical data and the preclinical dose ranging, really gives us confidence that a higher dose of Nemesimab can potentially achieve better monotherapy efficacy and drive even further weight loss when combined with semaglutide. The parallel approach that we're taking with further clinical data from the extension study for the durability and then evaluating a higher dose ranging in a well-powered phase 2-focused combination study with understanding a better characterization of the monotherapy dose will really keep the development of Nemesimab on track, and we're really focused on that, and we think that that's the next logical step for understanding our next important decision points. Next, I'll move to CMC. Another area that we've continued to make progress in has been all of our manufacturing and CMC work that includes our high-concentration formulation strategy.

That remains on track, and we believe a path to achieving the formulations that really align with our clinical protocols and expectations for our TPP, as well as patient convenience, remain on track. This is not simply a technical milestone for us. It is really rooted in a commercial TPP, and our focus is on reducing overall injection volume, lowering costs per gram, and ensuring we can compete as pricing pressures on incretins continue to intensify. This aligns, we believe, perfectly with our titration-free target product profile, and that is a key advantage over the incretin-based injectables that require a step-up dosing for tolerability. To clarify, Nemesimab has shown no additive GI burden at the 200 milligram once-weekly dose, and we expect to evaluate any higher dose without the need for titration, making it easier for both prescribers and patients.

Equally important, we're continuing to evaluate and manage and execute on measures that can significantly impact our cost of goods. This process includes optimization of the upstream and downstream manufacturing steps for Nemesimab and scaling up into high-fermentation volumes, and we're continuing to evaluate multiple delivery devices, including auto injectors, that will improve the patient experience. Together, these activities will have a significant impact on reducing our cost of goods to support an eventual pricing model that aligns with Medicare and is rapidly influencing the obesity market. We're ultimately designing a product that is potentially not only clinically differentiated but commercially durable from a manufacturability and real-world affordability. Next, we'll move into R&D. So beneath all of the clinical data sits an increasingly powerful scientific base.

The preclinical and translational work continue to show that Nemesimab reduces fat mass while preserving lean mass, improves insulin sensitivity and glucose control, lowers leptin and increases GLP-1, reduces hepatic steatosis and inflammatory markers, and maintains weight loss durability after treatment stops. This is consistent with what we're seeing clinically. Combination studies in DIO models with tirzepatide and semaglutide show greater than additive weight loss and minimal rebound, confirming that peripheral CB1 inhibition complements incretin biology mechanistically. Collectively, these results reinforce why Nemesimab is really the right molecule, the right mechanism, and the right program to move forward. Our message to investors ever since we began development on the Nemesimab program has been about discipline and delivery, and that remains true to today.

In Q2, we said we'll complete the top-line readout by late Q3, early Q4, and we did that, and we presented late-breaking data at Obesity Week last week. We also said we're going to continue with the current data set to guide our dose ranging, and that's what we're doing. We're going to continue advancing our CMC readiness in parallel, and we continue to improve manufacturing capability, as well as process improvements are going to continue to be ongoing. We're focused on the higher concentration formulation path, and that's on track and synchronized with our clinical development planning. We ultimately expect our monoclonal antibody to be the best way to target CB1 inhibition to enable confidence in the safety, and this pathway will ultimately show the clearest mechanism validation in terms of targeting this particular pathway.

With our phase 2A data, we have now provided an important initial demonstration of Nemesimab's utility that does offer the validation of the mechanism, and notably, we did that by showing that there's no neuropsychiatric adverse events or other unexpected adverse signals across the different cohorts that receive Nemesimab. We have just completed the fifth DMC meeting this past week with no concerns. Every commitment that we've made, we've made it on time, we've made it with precision, and we're going to continue doing that. Over the next 90 days and into 2026, our focus is on converting what we've learned from the clinical data into further execution. We're going to generate a more complete picture of Nemesimab's potential using insights from our PK/PD modeling and the ongoing extension study.

We're finalizing the next phase 2 design, and we're concentrating on combination and also in the maintenance indications where the data already point towards a really strong direction. We're continuing to advance the formulation and manufacturing work so that Nemesimab can be delivered practically at scale and with the cost discipline that the market demands. We'll also be presenting at several investor conferences beginning next week and into December and gearing up for sharing new preclinical and clinical data at all the major scientific conferences and meetings in 2026. Across each of these fronts, the through line is really about consistency. We've said what we would do, and we've delivered on the data and then on the timelines and on the execution.

Our next steps are an extension of that same discipline, and we're interested in continuing to focus on translating all of this into momentum and the momentum into value. This concludes the prepared remarks and comments today. We thank you, everyone, for joining the call, and we'll now open the call for questions from our covering cell site analysts. Operator, over to you.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Thank you. As a reminder, if you'd like to ask a question, press star one on your telephone keypad. We'll just take a brief moment to compile the Q&A we're asking. Our first question comes from the line of Michael DiFiore from Evercore ISI. Your line is live.

Kaitlyn Arsenault, CFO, Skye Bioscience: Hi, guys. Thanks so much for taking my question. Just two for me. Now that you've had some time to further digest the data from the trial, have you gained any additional insight between weight loss and exposure? I recall at the time that the data were revealed, you only had PK exposure versus weight loss up to 16 weeks. That's my first question. My second question is regarding the 26-week extension. Simply, are there enough patients? Forty-three patients seems sort of low. And do you have enough patients to draw any statistically significant insights? Thank you.

Puneet Dhillon, President and CEO, Skye Bioscience: Hey, Michael. Thanks for dialing in and asking the questions. I'll take the first question and kind of hand it over to Chris because he can further elaborate. As you kind of indicated there, obviously, we showed a really strong validation of the mechanism in the combo efficacy. The monotherapy dosing, I think, has been evident in terms of the issue was dose, not the biology. The exposure response really has demonstrated that the observed concentrations at the 200 milligram dose did not achieve the efficacy that we would expect because patients were underdosed. Chris can further elaborate in terms of what we've seen now based on the 26-week data set, as well as anything he wants to point to from the preclinical data.

Chris, Research/Scientific Expert, Skye Bioscience: Thanks, Puneet. Yeah, so to that point, we have, in fact, looked at a more complete PK data set. I would just note that the final PK/PD analysis, which is still underway, likely will not be available probably for another few more weeks to months. But we do have a more robust buildout, and we looked at a mixed effects model, both controlling for the placebo effect as well as doing a similar type of modeling where we controlled for the semaglutide effect and looked at that in a combo setting. In both instances, we see that there is really no bias in the residuals, so the models fit well. They align with the observed weight change that we saw in the trial. Importantly, they point to the point you are making, that is, we are seeing a nice slope, a very believable, credible slope that demonstrates this response related to exposure.

We feel very comfortable. The PK data is holding. We'll, again, have the final PK/PD model, but we feel very confident that, in fact, there is a dose response. As we get to better and better exposures, we will see better and better weight loss as both monotherapy and in combination. The other thing I've just pointed briefly since we've last talked, Michael, the translation of the DIO data has been further validated. We've done some important biodistribution studies looking at the compartments and how those fill relative to what's in the serum and using that along with some other approaches to really get a good fit in terms of how the DIO data, which demonstrates very clean dose response as well, how that translates to the clinical doses.

Both those pieces are really supporting this concept of higher dosing in the clinic to see better weight loss.

Puneet Dhillon, President and CEO, Skye Bioscience: Michael, would you mind just repeating your second question, or did we answer it?

Kaitlyn Arsenault, CFO, Skye Bioscience: No. So my second question is regarding the 26-week extension data. It seems that only 43 patients are enrolled. It seems kind of on the low side. I was wondering if that's enough patients to draw any statistical significant insights when the trial wraps up.

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. The good news on the extension is that enrollment has been—obviously, that was good that we saw good interest in the study, and retention has continued to stay really strong. It is a smaller number of patients relative to the core study, the first part, but we do believe that there will be a clear separation that we would be able to see, especially as if you recall in the 26-week time point, the first 26-week time point in the combination, we did see a really strong difference, and the slope was not plateauing. It continued. We hope that we are going to continue to see that separation between semaglutide alone. On the monotherapy, as we have indicated, we believe that there is still room to go higher in terms of dose. We will see what the data reveals.

At this point, it's a little tough to comment on that because we don't have that separation that we expected on the first 26 weeks.

Kaitlyn Arsenault, CFO, Skye Bioscience: That's great. Thanks so much.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Your next question comes from the line of Andy Hesaya from William Blair. Your line is live.

Speaker 4: Great. Thanks for taking our questions. We have two. One is more on the regulatory side. We're curious, very provocative data looking at the weight rebound. Do you need to have a monotherapy approval before a potential maintenance approval? Just trying to get a sense of the sequence and requirements based on your regulatory discussions with the agents. That's number one. Number two is we looked at comparative kind of randomized withdrawal studies, in particular step four with semaglutide. It seems like in that study, the weight regain was about 50% out to one year. In this study, the weight regain was much faster. I'm curious if there's any sort of patient baseline characteristics that you want to highlight that could explain the more rapid than expected weight regain from the semaglutide arm. Thank you.

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. I think these are both great questions and interrelated. I can pass it over to Dr. Arora to take those, and then I might come back with some additional commentary on the maintenance setting.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Yeah. Andy, to address your first question, yes. If we were to do maintenance therapy with Nemesimab as a monotherapy, that would require monotherapy approval. Although if that is the strongest suit for the drug, then the approval could be as maintenance as well. As part of our plan as we go forward is to continue looking at the monotherapy to find that optimal dose and frequency on how to dose monotherapy for varying indications, including maintenance. That is a question that we will be discussing with the agency, and I think that will be part of our continuing interaction with them as to how to push both monotherapy and combination forward and what differential path each one may need. I'm sorry, what was your second question?

Puneet Dhillon, President and CEO, Skye Bioscience: It's just on the regain piece, Dr. Arora. I think.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Oh, yeah. If you look at weight rebound data across a bunch of studies, there was a STEP 1 withdrawal study. I think it's one of the ones your cohort had some. Tirzepatide did some randomized withdrawals. In one year, the weight regain is about. It does tend to be somewhat accelerated in the first half because the weight regain is faster initially and then tends to plateau a little. We do see a somewhat faster regain in this study. We don't know why. We don't know of particular characteristics that we're seeing in the demographics, which in the study are frankly the same as you see in most other studies. We don't know why these patients regained their weight this quickly, but they did. Being a randomized trial, we figure that both the cohorts are effectively similar.

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. If I can just elaborate on one thing, Andy. Look, the durability data that we showed last week with the only 18% regain versus 50% for semaglutide alone is, I believe, a real cornerstone of our strategy, and it really validates what you saw from an R&D preclinical perspective. It shows that peripheral CB1 inhibition can provide a durable effect after treatment stops, which is a significant issue for the incretin-only therapies. I noticed coming from ObesityWeek, there has been a growing emphasis of the incretins or companies that have incretin pipelines focusing on the maintenance market as well.

We believe that this comment we made at the last earnings call, and we stand by it, is we do believe that we really have an interesting opportunity for Nemesimab to aggressively pursue a maintenance indication, which we can formally kind of look at once we finalize our dosing strategy. We see a massive commercial opportunity that is differentiated because it is more likely, and doctors will confirm this, that they would treat with a differentiated mechanism rather than maintenance with another Incretin after induction of Incretin is completed. I know Tu's investigated that from a commercial standpoint from the survey that we have done, and that has been confirmed. Tu, do you want to just expand on that? Yeah. I think you kind of covered it pretty well.

I think it is important to understand that the maintenance approach therapy is something that's being looked at a lot, not just by Skye, but from investigators and clinicians, as well as obviously other companies. As Puneet said, right now, there's not a lot of options other than another GLP-1 for patients to go on. Physicians are generally either reluctant or, in fact, I say at least the ones I've spoken to generally actually put them on something else other than a GLP-1, like a phentermine or something like that. To them, it makes more sense because it's a different mechanism of action, even though phentermine may have some other comorbidity issues as well as maybe not be as effective.

I think, again, in that space, I think there's a real market for a drug like Nemesimab that we think we can, where we think we can win.

Speaker 4: Okay. Thanks so much.

Puneet Dhillon, President and CEO, Skye Bioscience: Yep.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Your next question comes from the line of Ananda Ghosh from HC Wainwright. Your line is live.

Speaker 2: Hi guys. Thanks for taking my question, and congratulations on the accommodator. Looks really impressive. One of the questions I have is what kind of the magnitude of delta do you believe can be clinically and commercially viable when you are thinking about the combo potential? I was also curious to know what was the quality of weight loss in terms of the lean mass. That will be helpful. Thanks.

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. I think that's great, thanks, Ananda. I'll turn it over to Puneet Arora. He can take both those questions.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Yes, Ananda. Thanks for that question. You've seen that a lot of the effective weight loss medications that we have out there cluster in around the 20-22% range. In fact, if you speak to most obesity physicians, they'll tell you that a lot of patients do not even need 20% weight loss. Frankly, once you start exceeding about 10% weight loss, you can reverse a lot of comorbidities. Insofar as the benchmark today is about 20%, semaglutide or a generic GLP-1 usually gives you about 15%. We start seeing the other combinations adding up to another 5-6% like you see with tirzepatide. That is the differential that we would hope for. We're already seeing in our protocol set here a 14-point something percent weight loss at 26 weeks, which is 3.5% more than semaglutide alone. It is about a 35% increase.

We think that when we do a full 52, actually a 68-week treatment, which is where all these are measured, we will have a combination treatment effect that will be in the range or better than what we are seeing with all these other current combinations. We are actually seeing improvement in body composition along with this 30% extra weight loss. We had planned this at ObesityWeek as well. What we are showing is that if you just look at the crude numbers, semaglutide alone has about a 72% fat loss and 28% lean mass. When you add Nemesimab to it, this actually becomes a 76% fat loss and only 24% lean loss. There is a transition towards fat mass loss. When we break this down, we see that, as you know, there is 30% extra weight loss, right?

The fat loss goes from 15% for semaglutide to more than 20% when we look at the combination, whereas the lean mass loss almost does not change. It goes from about 5.5% to 6%. That is what is the effect that we are seeing in the lean to fat mass ratios and why the body composition is improving. All of the additional weight loss that we are seeing is almost all fat mass loss. Our secondary endpoint, to be specific, was lean to fat mass ratio. That ratio should increase with weight loss. The more the increase, the better your body composition is. In our trial, semaglutide increased that lean to fat mass ratio by 0.13. The combination improved it by 0.26, which is twice the improvement. This number was actually significant. The p-value was 0.01.

Speaker 2: Got it. Thanks. That was very helpful.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Your next question comes from the line of Jay Olson from Oppenheimer. Your line is live.

Speaker 4: Oh, hey. Thank you for providing this update. We have two questions. Our first question is about your current thinking around the potential for studying a combination of Nemesimab plus semaglutide for induction of weight loss versus maintenance of weight loss. While acknowledging the regulatory considerations, it seems like they both may offer potentially significant commercial opportunities. How are you weighing the pros and cons of induction versus maintenance? I had a second question, if I could.

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. Thanks, Jay. Thanks for joining the call today. That's a key question. We are certainly focused on the induction side when we're seeing this improvement that we've showed over the course of this early dataset with no observed plateau at 26 weeks. It really demonstrates a synergistic activity, and it's been very encouraging. We're looking forward to seeing what the 52-week data reveals. The current focus for the phase two B is on evaluating the right and optimal dose in combination with Sema. I think there's a little bit of other supportive data that we've seen from a preclinical perspective that Chris might be able to point to in terms of why we feel confident that dosing higher can lead to a better, deeper weight loss in Sema because of the data that we've seen so far with Tirzepatide and Sema in combination.

Chris, do you want to discuss that?

Speaker 2: Sure. Yeah. To that point, we directly asked that question in light of our recent clinical data. It was important to understand, as we get better exposure, moving from what we've modeled to be something very similar to our CB1 Nemesimab dose, which we're calling sort of a suboptimal dose in this DIO preclinical model, and then a more active dose. An active dose represents something that we're looking towards potentially using in future trials. Comparing the difference between the active and the suboptimal, you can, of course, see that as a monotherapy in terms of weight loss. Importantly, when we look at this in the setting of combination, we see while the additive effect is there, we really see a large improvement beyond the magnitude you might expect with the monotherapy.

It seems to really unlock the combo potential as well, maybe even beyond what we see with the monotherapy. It is important, we think, to really get the dose right as we look towards sort of that induction or that combination approach in the clinic.

Puneet Dhillon, President and CEO, Skye Bioscience: I think it's just important for us to emphasize that it's really relevant in terms of being a truly differentiated alternative or orthogonal approach to what's out there in terms of current combinations. Although the data's early and the 26-week data is very encouraging, when you do stack it up across these other combinations, it's really interesting to see how deep that response is initially. We're all excited to see how that reveals in a longer 52-week data point. At the moment, it makes a very compelling case for us to evaluate this in a phase two B combo.

Kaitlyn Arsenault, CFO, Skye Bioscience: Jay, this is Tu. I just want to sort of also add in the relevance of this rebound data and what I think that also means potentially for a market opportunity, not just in the maintenance setting, but also more in the combination setting where you can get that induction of weight loss. If in the real world where patients need to go on a dosing holiday for whatever reason, maybe they are actually going on holiday. They just do not want to bring their drug with them. Or maybe they have other things. Maybe there are access issues, things like that.

What our data suggests is that that's not going to be as big of a problem as it has been when patients do either lose access to their GLP-1 or have to go on vacation or have other reasons, that they're not going to have a significant rebound like we're seeing and that the step one data has shown, and that you can have this sort of holiday without sort of losing the gains that you've achieved through the treatment. I think that's really meaningful. I think a lot of physicians are looking at that. What that means is, how you can manage patients' weight over a much longer period of time than just sort of these sort of compressed times you're seeing in clinical trials and what that really means in the real world for patients.

Speaker 2: Okay. Great. Thank you. That's super helpful. If I could ask a second question, can you please talk about any KOL feedback you've received following the top line CB1 phase 2A data and also any feedback you may have received at ObesityWeek?

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. I think Chris is—or sorry, Tu probably first, and Tu and Dr. Arora. You guys can take those questions.

Kaitlyn Arsenault, CFO, Skye Bioscience: Yeah. Thanks for the question, Jay. I'll say that I think the reaction was positive. I think they see the combination data as very intriguing. They think that the responses that they're seeing are different. They definitely look forward to us looking at much at sort of this dose ranging study. They obviously see that that's a key. That's going to be really important for us to establish that sort of baseline, what that optimal dose is going to be. In terms of the blunting of the rebound data, that also has kind of resonated with a number of physicians and KOLs that we've spoken to to the point that I actually just brought up earlier. One specific physician actually brought that up and said, "This is really cool data.

If this means that a patient can go on a dosing holiday and not have to worry about gaining their weight back, then this can be really meaningful for their practice. Yeah, I think ultimately positive. Again, from a monotherapy side, I think they recognize our need to dose higher, but they do not see that as necessarily a deterrent for the future of the program.

Speaker 2: I think that.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Some of the leading physicians out there had experience with CB1 before. It is a pathway they've had interest in for a long time. The psychiatric events have been a source of trouble. I think they're really enthusiastic about the idea that you can get these effects and get them in a safe and tolerable manner. There is a rekindled interest now that we are showing that there's biological activity, and you can do that with an antibody without crossing the blood-brain barrier and getting these neuropsychiatric effects.

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. That's great that you emphasize that, Dr. Arora. I mean, I think that was the biggest immediate takeaway once the data hit the tape that we saw when we spoke to our clinical advisory board and other investigators that a lot of folks had just recognized that this was a big leap forward for the class. This is the first time that any dataset has been shared with no neuropsychiatric adverse events. That's a really important kind of step for us in being able to give us the comfort to be able to dose higher. We feel confident that there's going to be biological activity.

Speaker 2: Excellent. That's super helpful. Thanks for taking the question.

Kaitlyn Arsenault, CFO, Skye Bioscience: Thanks, Jay.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Your next question comes from the line of John Wullipin from Citizens. Your line is live.

Speaker 4: Hi. This is Katherine on for John. I think I have kind of a quick question about what you expect from the monotherapy arm in the 26-week update. What do you want to see in order to give you confidence in kind of choosing the path forward? I know that we talked a lot about the combo arm for obvious reasons. I'm just wondering about that.

Puneet Dhillon, President and CEO, Skye Bioscience: Hey, Katherine. Thanks for joining the call and stepping in for John. Yeah. From the next 26-week data, the difference here is that we've increased the dose from 200 milligram to 300 milligram. What we have emphasized, obviously, to our clinical sites is really making sure that there's strong follow-through in terms of not only from a patient retention standpoint, but ensuring that if there's any noise here regarding compliance, we rectify that. At the end of the day, what we're really looking for is a better understanding for our PK model at this dose. In terms of efficacy, it's really hard to predict at this point in terms of what that's going to be relative to what we've seen so far in the first based on the 26-week data.

We are obviously encouraged by the PK/PD modeling that we've done at higher doses that we should be able to reach the 5% or higher bar. We need to see that data, and we want to make sure that we have an improvement in terms of our sensitivity around the PK/PD understanding.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Just to clarify, we did use a slightly higher dose in the extension, but as Puneet said, primarily to help us refine our PK models. When we do a phase two study, we will look at meaningfully higher doses and different exposures. We think that will give us a more positive result.

Speaker 4: I know that in the past you said about a thousand that you're going to go up to about 1,000 milligrams. Have you changed your thinking at all on the target for the higher dose?

Puneet Dhillon, President and CEO, Skye Bioscience: Yeah. We're still working through that, Katherine. For monotherapy, we expect basically to unlock efficacy at higher doses. Like we said, it's in line with our exposure and response modeling. It hasn't necessarily ruled out that the 200 and 300 are effective doses as well. I think we had some lack of consistency in terms of what we saw in the first 26 weeks. In our slides that we shared during the top line data review, I think we showed some indication of what the optimal dosing would have revealed. Those patients that had increased exposure response, they tended to do really well versus the patients that were suboptimally dosed or had lower exposure response. I think what we need to see is if that is kind of course correcting in what we're evaluating.

We have confidence that dosing higher is definitely going to show a higher likelihood of an efficacy signal that we expect to see. We expect that to be over 5% at 26 weeks at these higher doses that we want to evaluate.

Speaker 4: Thank you.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: Your next question comes from the line of Ted Tenthoff from Piper Sandler. Your line is live.

Speaker 2: Great. Thank you so much for taking that question. I wanted to maybe dig into the other side of going higher on dose. From the combination of earlier studies, preclinical data, and then the initial CB1 results, obviously, we're going to keep a close eye on potential CNS side effects. Is there anything else that we should be really focused on or that could sneak up on us from a safety standpoint of taking the doses to these substantially higher levels? Thanks so much for answering the question.

Puneet Dhillon, President and CEO, Skye Bioscience: Hey, thanks, Ted. Yeah. I think we feel really confident about the safety signal and allowing us the room to go higher in terms of dose, especially from the standpoint of any concern of neuropsychiatric adverse events. In this study, based on our phase one data, based on our tox data, there's a substantial amount of room relative to where we're at in terms of dosing. In terms of other safety concerns, I think we have to see. We do not have the data yet at higher doses over this longer period of time, whether that's a change in terms of GI tolerability. We feel at this point, based on the data that we've seen in the phase two, that there was not any concerns to be able to go higher. Across the class, it seems to be a little bit different.

Some small molecules have had only about 30% GI issues. Then the monouniband data recently showed about 60% GI issues. We do not know if that is linked to CB1 yet or if it is molecule specific. At the moment, though, there still seems to be substantial room for us to be able to evaluate that. Mechanistically, it is not the same. The mechanism is different than what the GLP-1 drugs are doing. We feel that we should not have any exacerbated GI burden. Dr. Arora, sorry, you might want to take that further.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Yeah. It's been my sense that even with the data, if you go back to rimonabant, that even though they showed 30% GI effects, there was a certain placebo effect as well that's worth comparing to, which seemed to suggest that the GI effects that you see with the CB1 pathway are not that significant. Of course, with Nemesimab, we are showing even better results at this dose where essentially there's no difference between placebo and what we are seeing with the drug. With the GLP-1s, which is where all the attention comes from, I believe that a lot of the GI effects tend to come because of the central action on places near the hypothalamus, like the area postrema, whose job is to see what's going on in your blood and cause you to have nausea or vomiting if they think that there is something that's deleterious.

Stimulating receptors are causing that. It is very possible that the CB1 mechanism does not actually do that. That is why you see GI effects being so much more muted with this mechanism, and especially with the antibody nimacimab. We will test this, as Puneet said, with higher doses. We are pleased to see that at least with the dose that we have tested, we are seeing really neutral effects.

Speaker 2: Yeah. That's great. In the next study, how long do you think you'd be able to dose? Thanks so much for taking my questions.

Kaitlyn Arsenault, CFO, Skye Bioscience: Thanks, Ted.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Yeah.

Kaitlyn Arsenault, CFO, Skye Bioscience: Oh, go ahead.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: Go ahead, Punit.

Kaitlyn Arsenault, CFO, Skye Bioscience: No, go ahead.

Dr. Arora, Medical Expert/Advisor, Skye Bioscience: In a phase two study, I mean, we want to dose people all the way out to a year of 52 weeks. But we're still looking at what the primary structure of the study should be. What we'd like is to design a study that will move us meaningfully towards doing pivotal studies. So we may still read out data at, say, 26 weeks where you can get a substantial indication of how individual doses are working and get a lot of safety information. But we do want to design studies in the end where the patients that we recruit get longer-term treatment and can be treated for a year or even longer.

Speaker 2: Yeah. That's great. I really appreciate all the answers, guys. Thanks so much.

Kaitlyn Arsenault, CFO, Skye Bioscience: Thanks, Ted.

Bernie Hertel, Head of Investor Relations, Skye Bioscience: There are no further questions for the Q&A session. Thank you for attending Skye Bioscience's third quarter 2025 earnings call. You may disconnect.

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