S-1: Skye Bioscience Files for Resale of Up to 33.7 Million Shares After Merger and Private Placements

Skye Bioscience registers for the potential resale of up to 33.7 million shares of common stock by selling securityholders following a merger and several private placements.

Summary

• Skye Bioscience has filed a registration statement for the potential resale of up to 33,753,271 shares of its common stock.
• These shares are held by selling securityholders and were issued in connection with the merger with Bird Rock Bio, as well as subsequent private placements in 2023 and 2024.
• The company will not receive any proceeds from the resale of these shares, but will receive proceeds from any warrants exercised for cash.
• The filing includes shares issued under the Merger Agreement (6,100,821 shares), the 2023 Purchase Agreement (2,325,537 shares), shares issuable upon exercise of the 2023 Warrants (2,325,537 shares), shares issuable upon conversion of the MFDI Note (968,973 shares), shares issuable upon exercise of the MFDI Warrant (340,000 shares), shares issued pursuant to the January 2024 Purchase Agreement (11,713,664 shares), and shares issuable upon exercise of the Pre-Funded Warrants (9,978,739 shares).
• The company's common stock is quoted on the OTCQB market under the symbol SKYE, with the last reported sale price on March 26, 2024, being $13.77.
• The company is a clinical stage biopharmaceutical company focused on developing new medicines that unlock the pharmaceutical potential of the endocannabinoid system (ECS).
• The company's clinical assets focus on the modulation of cannabinoid receptor 1 (CB1) to provide novel treatments and alternatives for diseases caused by metabolic disorders, inflammation, fibrosis and neurodegeneration, such as obesity and glaucoma.
• The company's Phase 2 clinical candidates include nimacimab, a negative allosteric modulating antibody that inhibits peripheral CB1 receptors, currently being developed for the treatment of obesity and SBI-100 Ophthalmic Emulsion (SBI-100 OE), a CB1 agonist (activator), currently being developed for the treatment of glaucoma and ocular hypertension.

Sentiment

Score: 5

Explanation: The document is neutral in tone, primarily providing factual information about the company's business, financial condition, and the resale of shares. While it mentions potential risks and uncertainties, it also highlights positive aspects such as the company's clinical candidates and future plans.

Positives

• The company has two Phase 2 clinical candidates: nimacimab for obesity and SBI-100 OE for glaucoma and ocular hypertension.
• The company has filed and successfully opened an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) for nimacimab in obesity.
• The company is continuing clinical development of SBI-100 OE for glaucoma and ocular hypertension, with the first data read out from our recently completed Phase 2a trial anticipated in Q2 2024.

Negatives

• The company will not receive any proceeds from the resale of shares by the selling securityholders.
• The company has incurred significant operating losses since its inception and expects to incur significant losses for the foreseeable future.
• The company is heavily dependent on the success of its early-stage product candidates, SBI-100 and nimacimab, which will require significant additional efforts to develop and may prove not to be viable for commercialization.

Risks

• The company has a limited operating history and has incurred significant operating losses since its inception.
• The company is heavily dependent on the success of its early-stage product candidates, SBI-100 and nimacimab.
• Serious adverse events or undesirable side effects or other unexpected properties of any of the company's product candidates may be identified during development or after approval.
• The company expects to rely on third parties, such as CROs, to conduct some or all of its nonclinical and clinical trials.
• The company relies on, and expects to continue relying on, third party contract manufacturing organizations to manufacture and supply product candidates for the company, as well as certain raw materials used in the production thereof.
• The company expects to face intense competition, often from companies with greater resources and experience than the company has.
• The company's product candidate, SBI-100 OE, will be subject to U.S. controlled substance laws and regulations.

Future Outlook

The company plans to launch a Phase 2 clinical trial to evaluate nimacimab for the treatment of obesity as monotherapy compared against placebo, as well as evaluate the combination of nimacimab and a GLP-1 agonist in Q3 2024, with final data in late 2025. The first data read out from the company's recently completed Phase 2a trial of SBI-100 OE for glaucoma and ocular hypertension is anticipated in Q2 2024.

Industry Context

The document highlights the competitive landscape in the pharmaceutical industry, particularly in the areas of metabolic disorders and glaucoma, noting the presence of larger, better-funded companies and the increasing number of competitors.

Comparison to Industry Standards

• The document mentions Novo Nordisk's Wegovy (semaglutide), a GLP-1 agonist, and its significant sales growth, indicating the commercial success and limitations of GLP-1 agonists for obesity treatment.
• It also references Inversago, a company developing a peripherally-restricted CB1 inverse agonist therapy for weight loss, which was acquired by Novo Nordisk, suggesting the industry's interest in CB1 inhibition as a potential treatment for obesity.
• The document compares nimacimab to rimonabant, an earlier CB1 inverse agonist, highlighting the potential for nimacimab to avoid psychiatric adverse events by targeting CB1 inhibition solely in the periphery.
• It also mentions Jenrin Discovery's JD5037, a CB1 antagonist with limited brain penetrance, and its preclinical studies demonstrating weight loss and restoration of leptin sensitivity in obese mice.

Legal Proceedings

• The Company is a party to a legal proceeding with a former employee alleging, among other things, wrongful termination, violation of whistleblower protections under the Sarbanes-Oxley Act of 2002, and retaliation under California law against the Company relating to certain actions and events that occurred with the Company's former management during the employee's employment term from March 2018 to July 2019.
• The Company is pursuing up to $5,000,000 in coverage less the deductible to cover legal expenses incurred and the final verdict or settlement of the Cunning Lawsuit.

Related Party Transactions

• The Company has entered, and may continue to enter, into transactions with affiliates and other related parties for financing, corporate, business development and operational services.
• The Company has entered into a multi-draw credit agreement with Emerald Health Sciences, Inc. (Sciences), who was previously a beneficial holder of more than 5% of our capital stock, for an unsecured credit facility of up to $20,000,000.
• In January 2021 and April 2021, the Company entered into two separate Collaborative Research Agreements with VivaCell Biotechnology Espana, S.L.U (VivaCell), a research and development entity with substantial expertise in cannabinoid science and a subsidiary of Emerald Health Research, Inc. which is 100% owned by Sciences.
• On October 11, 2021, the Company entered into an Exclusive Sponsored Research Agreement (the ESRA) with VivaCell to fund certain research and development programs which are of mutual interest to both the Company and VivaCell.
• On February 28, 2022, the Company entered into a standard consulting agreement with the CEO's brother to assist with diligence on the EHT Acquisition due to his knowledge and expertise as a former executive of EHT.

Stakeholder Impact

• The potential resale of shares may impact the share price of the company.
• The success of the company's clinical trials and product development will impact shareholders, employees, and patients.
• The company's ability to secure additional funding will impact its ability to continue operations and develop its product candidates.

Next Steps

• Launch a Phase 2 clinical trial to evaluate nimacimab for the treatment of obesity as monotherapy compared against placebo, as well as evaluate the combination of nimacimab and a GLP-1 agonist in Q3 2024, with final data in late 2025.
• Continue clinical development of SBI-100 OE for glaucoma and ocular hypertension, with the first data read out from our recently completed Phase 2a trial anticipated in Q2 2024.
• Initiate a Phase 2b study evaluating SBI-100 OE against a current standard of care.

Key Dates

Keywords

resale, common stock, Skye Bioscience, private placement, merger, warrants, nimacimab, SBI-100 OE, biopharmaceutical, clinical trial, FDA, obesity, glaucoma