Title

Presentation

Skye Bioscience, Inc. beats earnings expectations. Reported EPS is $-0.1, expectations were $-0.25.

Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Skye Bioscience Third Quarter 2024 Earnings 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: Hello, and thank you all for participating in today’s call. Joining me today is Punit Dhillon, Skye’s President and CEO; and Kaitlyn Arsenault, Skye’s CFO. 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 the company’s filings with the Securities and Exchange Commission concerning these and other matters. I’ll now turn the call over to Punit Dhillon.

Punit Dhillon: Good afternoon, everyone. Thank you for joining us on Skye’s first earnings call and we appreciate your continued interest in Skye and your support for our journey focused on developing metabolic medicine that we believe is relevant to the market and has the potential to be impactful for patients. The third quarter and periods subsequent to the quarter have been momentous on the clinical front and with respect to new preclinical data, and I’ll provide an update on these accomplishments in an overall strategic context and ongoing efforts across our programs and operations. We believe that the utility of the incretin mimetic drugs still begs improvement with respect to tolerability, lean mass preservation and the sustainability of using such weight-loss drugs.

The pharmaceutical obesity drug leaders themselves have been acknowledging that this need and the potential importance of non-incretin mechanisms via multiple announced acquisitions and partnerships. We believe that CB1 inhibition has mechanistic attributes and potential clinical outcomes that position it as a promising complement or alternative to incretin mimetic, such as GLP-1 receptor agonists. The history of CB1 inhibition mechanism has provided promising clinical evidence of its utility. However, there’s also been concerning neuropsychiatric adverse events associated with the first- and second-generation small molecules employing this mechanism. Hence, we face an exercise to reset the evidence and discussion around CB1 class of drugs.

And we do this by conducting research and conveying data that delineates the role and requirement of peripheral versus central CB1 inhibition and we also do this by highlighting the importance of differentiating outcomes that can potentially be realized from CB1 inhibition based on the distinguished approach of a monoclonal antibody, such as Skye’s nimacimab versus the original approach of small molecules. We recently have made an important stride to contribute to this knowledge base and discussion. So let me first delve into our newly announced preclinical data and then I’ll update you on our Phase 2 obesity clinical trial. Just days ago, we issued a news release and conducted a satellite event at ObesityWeek with our science team and KOLs that highlighted compelling preclinical data showing the prominent role played by peripheral CB1 inhibition and the lack of need for central CB1 inhibition to achieve significant dose-dependent weight loss.

We believe this was the first ever publishing of such evidence using a virtually completely peripherally restricted CB1 inhibitor. We believe this data is important because even though first- and second-generation small molecule CB1 inhibitors have both achieved clinically relevant weight loss, the data does not indicate the weight loss was driven by central CB1 inhibition. Yet their accumulation in the brain induced neuropsychiatric adverse events, serious in the case of rimonabant, mild to moderate in the recently reported case of monlunabant, and these small molecule CB1 inhibitors collectively caused adverse events ranging from suicidality and depression to anxiety, irritability and sleep disturbances. In contrast, data from the prior Phase 1 and comprehensive non-human primate studies for Skye’s nimacimab, which is virtually undetectable in the central nervous system and is to our knowledge the most peripherally restricted CB1 inhibitor, showed no neuropsychiatric adverse events.

I will also emphasize that referencing back to the high incidence of gastrointestinal concerns with GLP-1 receptor agonists, in the Phase 1 study of nimacimab, the incidence of GI adverse events was below 5%. But to repeat simply, we believe you need peripheral CB1 inhibition and that you do not need central CB1 inhibition. If a CB1 inhibitor has exposure to the brain, it could create neuropsychiatric adverse events and we don’t think most observers view even mild to moderate neuropsychiatric adverse events as being acceptable in the context of a drug that must be used for extended periods and in maintenance mode potentially forever. These limitations of small molecules underscore the need for a new approach of a novel molecule such as nimacimab.

By the way, I encourage you to watch the video at the ObesityWeek event, which is now posted on our website. With the distinct positioning of nimacimab within the class of CB1 inhibitors and with the compelling new insight from our preclinical work, we could not have greater enthusiasm and energy to advance this program. With our human CB1 knock-in model up and running, we have an ongoing research program to explore different parameters related to nimacimab alone and in combination to arrive at further insight regarding CB1 inhibition and nimacimab. And we’re applying maximum effort to what is obviously a vital outcome on translating this into the clinic, Phase 2 data. I can tell you that our Phase 2 obesity clinical trial named CBeyond, which started enrolling patients in August throughout the U.S., is enrolling very well.

The study’s tracking towards our anticipated goal of announcing interim data at 50% enrollment of the planned 120 patients after 26 weeks of treatment in Q2 next year and topline data after full enrollment by the end of 2025. CBeyond CB1 is a randomized, double-blinded study that is designed to demonstrate an 8% difference in mean weight loss using nimacimab versus placebo at 26 weeks. Secondary and exploratory endpoints will evaluate safety, tolerability, neuropsychiatric and cognitive outcomes, and change in body composition by DEXA. The study is also assessing synergistic outcomes when nimacimab is combined with semaglutide, a GLP-1 receptor agonist. Successful execution of the CBeyond trial will help refine our clinical development strategy, but also establish a counterpoint to the safety concerns that have been claimed against this class of drugs as a result of the small molecule CB1 inhibitors.

We believe that the Phase 2 CBeyond trial will recapitulate the Phase 1 safety data for nimacimab and establish that a truly perfectly restricted antibody can drive significant weight loss without neuropsychiatric liability. Our objective is to demonstrate clinical proof-of-concept supporting our options to initiate a Phase 2b trial and/or advance closer to Phase 3 readiness and position nimacimab as a strong candidate in the anti-obesity medication landscape. These efforts are fully aligned with our broad goal of establishing Skye as a leader in non- incretin metabolic therapies. Beyond these primary initiatives, we are naturally looking towards the horizon and laying a foundation for a comprehensive and differentiated clinical pipeline and therapeutic footprint in the metabolic health space.

Our multiple initiatives include, first, pursuing key preclinical work to further understand pertinent metabolic-related mechanisms. Second, we want to optimize nimacimab’s clinical profile to ensure efficacy, safety and ultimately market penetration. And third, we’re advancing the evaluation of additional GPCR targets that address the complexity of various metabolic pathways with the focus on really complementing nimacimab’s mechanism of action and evaluating combinations of different drug targets. Our goal is to create therapies that are not only effective, but also capable of providing a multimodal mechanism for treating comorbidities of obesity safely and sustainably. Supporting this is long-term adherence to pharmacotherapy and safety, which are crucial, particularly for chronic disease management.

We look forward to sharing more on these initiatives in 2025. With that, I’ll turn the call over to Kaitlyn, our CFO.

Kaitlyn Arsenault: Thanks, Punit. After the market closed today, we issued a news release and filed Skye’s Form 10-Q filing with the Securities and Exchange Commission, outlining our third quarter financials. We encourage you to reference the filing for details of our financials and the risk factors described in our other filings with the SEC. I will now provide a brief overview of key financial results for the third quarter ended September 30, 2024. Research and development expenses for the third quarter of 2024 were $4.9 million, as compared to $1.3 million for the same period in 2023. The increase of approximately $3.6 million was primarily due to contracted clinical and manufacturing costs associated with our Phase 2 clinical trial for nimacimab and obesity.

The remainder of the increase resulted from increases in employee benefits, travel and consulting fees driven by increases in headcounts. General and administrative expenses for the third quarter were $4.6 million, compared to $2.2 million for the same period in 2023. The increase was primarily due to increases in non-cash incentive stock-based compensation, professional services, and fees for tax, audit and legal services related to our required regulatory filings, financial advisory services and patent prosecution for the nimacimab IP. These costs were offset by a period-over-period decrease in litigation-related fees. The net loss for the third quarter of 2024 totaled $3.9 million and included non-cash share-based compensation expense of $1.9 million, compared to a $24.9 million net loss for the third quarter of 2023, including non-cash share-based compensation expense of $0.2 million.

The primary reason for the significant decrease related to the acquisition of the nimacimab in-process research and development asset for $21.2 million during the three months ended September 30, 2023, all of which was expensed upon acquisition. In addition, we recognized $1 million in interest income and $4.6 million in income from the partial derecognition of liabilities and the recovery of losses related to our legal proceedings. On September 30, 2024, Skye had cash and cash equivalents of $76.5 million, including its restricted cash. During the third quarter, our $5 million note was converted into shares of Skye common stock and subsequent to quarter end, the United States Court of Appeals for the Ninth District vacated the judgment with respect to an outstanding litigation matter.

As a result, the company will be able to recover the $9 million restriction on its cash related to the appeal bond, which is expected to be released before year end. We are currently burning approximately $6 million per quarter, which we expect to increase to approximately $9 million per quarter in 2025. We believe that our capital will fund our Phase 2 clinical trial for nimacimab and operations through the third quarter of 2027. Extending our runway one quarter past our last estimate. Our priority is high-value metabolic programs, and we believe that this strong financial footing allows us to focus on reaching critical milestones without financial constraints. I’ll now turn the call back over to Punit.

Punit Dhillon: Thank you, Kate. I want to highlight that we have purposefully worked to maintain an effective but relatively small team of well-qualified individuals who possess the right expertise and experience and who are focused and motivated. We strive every day to make good strategic and tactical decisions while being unafraid to move forward on steps that will expedite our journey to get to data and answer the hard questions and could potentially represent important instruction points. It’s important to emphasize that our primary focus is on the regulatory approval strategy and execution for nimacimab and the treatment of obesity. The second is advancing opportunities with nimacimab in the clinic and evaluating other metabolic diseases, and we have a foundation on the preclinical model we highlighted in yesterday’s announcement.

The third is to expand the pipeline to broaden the metabolic target. So we’re conscious about effective spending and always consider value rather than simply cost, and we’re driven to have a cohesive but critical team advancing towards the milestones that we’ve laid out for our company and its stakeholders. We’re generally focused on creating value for patients and for our and with this overarching view, our team numbers 17 at this point, and in the third quarter, we added Dr. Puneet Arora, our Chief Medical Officer. Dr. Arora is an endocrinologist with an extensive metabolic experience. Since he started in early September, he has hit the ground running and has already made important contributions. We’ve also aimed to have relevant and demanding but constructive Board members.

After evolving the board earlier this year, in the third quarter, we added Karen Smith as a new director. She has significant global biotech and pharmaceutical experience, and Paul Grayson has also expanded his board role to become Chairman, and we congratulate him on that important step. We also rely on very competent service providers to execute key initiatives in the respective key functions of our company. We have a sharp focus to strengthen the team and systems that allow us to move forward, and our team’s resilience, focus and pursuit of innovation have enabled us to advance rapidly in this exciting and dynamic space. And that is the essence as we move forward. So, to quickly recap, we believe nimacimab’s first-in-class profile as a perfectly targeting CB1 inhibitor offers the right combination of efficacy and safety that position it to realize a significant opportunity for CB1 inhibition to drive meaningful dose and weight loss, fat mass reduction and lean mass preservation, improve glycemic control and weight loss, and achieve other metabolic benefits, all without crossing the central nervous system and risking neuropsychiatric adverse events.

We view Skye as having the right combination of attributes to lead to the emergence of CB1 inhibition as an important additional mechanism in the obesity landscape and to play a broader role in enhancing metabolic health. Shareholders can expect that since launching our CBeyond clinical trial in Q3 2024, our goal is to achieve our Phase 2 clinical milestones while also advancing the necessary regulatory and manufacturing steps to prepare nimacimab for late-stage clinical development. We have a comprehensive strategic roadmap that over the next three years positions us to deliver key clinical and preclinical data and lays the long-term foundation. And we are more optimistic than ever about our strategic path forward. I want to thank our investors, employees, development partners, and our clinicians and patients for helping us advance our mission.

Together, we’re building a future where impactful new treatments in metabolic health can become a reality. This concludes our prepared comments for today. Thank you very much for joining us and we’ll now open the call for questions from our covering sell-side analysts. Operator, over to you.

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Edward Tenthoff with Piper Sandler. Your line is open.

Punit Dhillon: Hi, Ted.

Edward Tenthoff: Great. Thank you so much for the update and I’m really excited with all of the progress. I’m looking forward to the data next year. I wanted to ask, just in terms of CBeyond, can you give a little more color on how enrollment is going? Is there excitement around this? I have to mention, especially with the potential of combining mechanisms. And when it comes to the data that we could get, the interim data look, I know you’ve given a sense of what we should expect in terms of monotherapy weight loss from nimacimab. What do you think we should be expecting in terms of combination data, since there will be really only kind of a few patients, half of the patients, probably around 10 per arm at that point? Thanks so much.

Punit Dhillon: Yeah. Ted, thanks for joining the call and I appreciate seeing you earlier in the week at the ObesityWeek event. Yeah, so on the direct question on operations, we’re executing very well on the CBeyond Phase 2 obesity study. The study has 18 sites across the U.S., which include some notable academic centers, with the exception of three sites. 15 sites are actively recruiting. Regarding enrollment, we’re enrolling really well. I think we’re on track to have 50% enrollment before year-end. And I think on the more finer point of what we expect in terms of data, the monotherapy is where the primary power is of the study. So the endpoint are — the primary endpoint is 8% weight loss, placebo-adjusted. But the exploratory endpoint is looking at the combination with a GLP-1 receptor agonist with semaglutide and there we’re looking for an additive or synergistic kind of a weight response.

So it should be higher and hopefully demonstrate improved tolerability. I think, overall, our purpose behind this study has really been about a robustness of a study plan, where we’re asking all the critical questions of weight loss, of body composition, of durability across three active arms, right? So we have the monotherapy arm and then the Wegovy arm, and then the Wegovy plus the nimacimab arm, and then comparing that against placebo over 26 weeks. So I think from — as well as the 13-week follow-up. So when you think about it kind of collectively with what’s happening in the space, we believe it’s going to be the key data point, the key next data point, not only in the CB1 class, but overall in the non-inclusion class, as well as this important data point that you highlight in terms of the combination.

So I think that should be quite exciting in terms of what we’ve been seeing so far coming off of ObesityWeek and then into the upcoming scientific meetings that are happening in 2025.

Edward Tenthoff: Great. That’s super helpful. I’m really excited to see the deal. Thanks so much.

Operator: Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

Jay Olson: Oh! Hey. Congrats on all the progress and thanks for providing this update. We have a few questions, maybe just to start. Can you discuss any KOL feedback from the preclinical data you presented at ObesityWeek at your satellite event, and especially with regards to the body composition findings in your preclinical model and potential to preserve lean muscle mass, and any physician reactions to those findings? And then we have follow-up.

Punit Dhillon: Yeah. Thanks, Jay. I appreciate your coverage of that event. The key thing, the finer technical points that we established at the meeting were really distinguishing between the peripheral versus central CB1 inhibition. That peripheral CB1 inhibition is not only necessary, but sufficient for weight loss. And in terms of the KOL feedback, I think it’s a much broader appreciation relative to the backdrop of the monlunabant data. So if we go back about six weeks with the monlunabant data, it basically revealed that central CB1 inhibition leads to adverse neuropsychiatric effects and without any additional benefit in terms of dose response. So our event, I think, covered some very important background in terms of the sufficiency of peripheral response that the PK modeling that Chris shared in detail showed that there’s an effective peripheral CB1 inhibition that’s required in order to get the efficacy that we’re looking at.

So when we’re looking at concentrations above IC90, there’s with nimacimab, we’re not seeing any of the exposure in the brain. And based on the modeling that he presented, the small molecules are exceeding IC90 in the brain at the mid and high doses. And I think that has really helped in terms of conveying the mechanism understanding with KOLs. Dr. Aronne was at the event and I think he disclosed that he’s an advisor to Novo. So I think he has been very, I think, impressed with how the peripheral restriction of nimacimab, everyone encouraged them to watch the overall event or look at the slides and you can kind of get into all of the details that I’m explaining here. But the key takeaway is that, there’s really strong preclinical efficacy of nimacimab.

It’s demonstrating a significant dose dependent weight loss and it’s shown this improvement in terms of glucose metabolism, as well as lean mass preservation. So it’s pointing towards a favorable impact on body composition as well.

Jay Olson: Great. That’s super helpful. Thank you for that. And then just to follow up on your earlier comment that the focus of the CBeyond study will be on the monotherapy treatment with nimacimab. I guess just from a commercial perspective, how are you viewing the path forward for combinations of GLP-1 drugs with nimacimab in the treatment landscape and that opportunity as it compares to the monotherapy treatment opportunity in the commercial setting? Thank you.

Punit Dhillon: Yeah. It’s a great question. I think it’s clear that the field is really dominated by the incretin mimetics or most of the drugs, like how we’ve classified it as focused on appetite suppression. I think the nimacimab really stands out as an alternative. Certainly, categorically a groundbreaking alternative, I would say, because it’s a peripheral driven mechanism and rather than just forcing caloric restriction, it’s targeting peripheral CBeyond receptors that really promote that metabolism. So what we’re doing is restoring by targeting that metabolism, we’re restoring insulin, we’re restoring leptin sensitivity with this mechanism and that’s what we’re trying to demonstrate in the clinical trial.

This mechanism, I think, is very complementary to the GLP-1 class based on how we’re evaluating this clinical trial based on input that we’ve been able to get in designing the trial from our advisory group. The goal here is to show a durable, high quality weight loss and an overall improved metabolic health. I think it’s evident that the GLP-1 and overall incretin combos are very effective. They’re showing 20% plus weight loss. But at the same note, that’s not entirely necessary across the entire cross section of the overweight or obese population. And there is an opportunity to focus in on the overweight on the Class 1 category, as well as kind of better appreciate the subtypes of obesity because of other comorbidities. So I think we have an opportunity to continue to demonstrate that with a sustainable, hopefully smarter weight management and overcome some of the issues with what’s been only available to-date.

And for us, every meeting that we’ve been going to and every data point that we’ve been able to share has really helped in terms of broadening that confidence externally and in terms of Rx development execution, in terms of KOLs and obesity doctors appreciating that there’s a need for these non-incretin mechanisms.

Jay Olson: Excellent. We definitely appreciate the strategy there and thank you so much for taking our question.

Punit Dhillon: Thank you, Jay.

Operator: Our next question comes from the line of George Farmer with ScotiaBank. Your line is open.

George Farmer: Hi. Good afternoon. Thanks for taking my question. Yeah. In reference to the presentation that you had at ObesityWeek and being able to use such a powerful mouse model now at your disposal, I’m wondering if you have plans to do further preclinical work, say, comparing the nimacimab with other small molecule CB1 modulators or perhaps combining with incretin mimetic and build a preclinical body of evidence before the ultimate clinical trial data reads out. That might be really helpful. I’m just wondering what you’re thinking.

Punit Dhillon: Yeah. Thanks, George. That’s a great question. So, Chris is on the line, so I will let him expand on this. But what we — we’re really happy that we have this proprietary DIO model up and running. So that’s really foundation for how we expect to continue to build on the data set. As we’ve seen in the space, everyone’s continued to refine their DIO models and demonstrating different components of that. We have additional data that hasn’t been shared yet that came out of this experiment, which we’ll continue to make public. But the goal here is to continue to expand on our preclinical to better understand the nimacimab mechanism, as well as evaluate combinations. So we are exploring other combinations.

We haven’t given any guidance on when all that data is available. There’s certainly a goal here to be continuing to share that broader understanding of what the nimacimab mechanism is and what the relevance is in terms of other non-incretin as well as incretin mechanisms. And then there’s I think the emphasis, I would say, has still been just execution on the clinical program. So everything kind of always goes back to what we are learning from the preclinical studies to support our better understanding of clinical. I hope I didn’t take all the words out of Chris. But Chris, do you want to elaborate on anything?

Chris Twitty: No. Well, I’ll just briefly mention, and thanks for the question, George, that as we noted, we do have a homozygous colony that’s been expanded. So we’re in a really nice position to set up a series of studies. And you’re correct to identify some of the comparators that we’re going to be looking at, not only the combinations, but importantly, as you mentioned, some other potential anti-obesity medications, including some of the small molecule inhibitors. That’s going to be quite interesting. The things that we’re all considering in addition to the combos and really digging into not just weight loss, body composition, but other related mechanistic biomarkers and readouts. So we’re really looking forward to sharing all that, and yeah, we’ll keep you posted as we do that.

George Farmer: Okay. Great. Thanks very much.

Punit Dhillon: Thanks, George.

Operator: Next question comes from the line of Albert Lowe with Craig-Hallum. Your line is open.

Albert Lowe: Okay. Thanks for taking my question. I just had one that I was curious about. Do you have any theories on perhaps if nimacimab’s unique mechanism of action could potentially underlie this well-tolerated profile that you’ve seen so far, especially with respect to GI adverse events?

Punit Dhillon: Yeah. Chris, I’ll let you take that or Dr. Arora, if you want. Maybe Chris?

Chris Twitty: Yeah. It’s a great question. We’ve certainly seen a very favorable, not only from a neuropsych perspective, but a GI perspective. The tox profile has been excellent with a fairly robust number of Phase 1 patients. And it’s no secret relative to small molecule disorders that in general antibodies are incredibly specific and it may relate to really being a difference, not so much in the target, but in the modality, antibody versus small molecule and that may relate to sort of the PK relationship, the amount of dose, and ultimately specificity. But we don’t have a really clear answer. We just have the data. And to your point, so far it looks excellent and we’re hoping to build on that. But I don’t know, Dr. Arora or Tu may have a different opinion.

Dr. Puneet Arora: Yeah. There can be different mechanisms by which you get GI intolerance, especially with the GLP-1 agents. And they tend to be related, for example, I mean, take GLP-1 as a framework here, both to delayed gastric emptying, which is peripheral, but also their actions from the area of the schema by those individual peptides, the same thing can be true of small molecules when they are able to penetrate. So, yeah, being an antibody might make a difference. I think I agree with Chris here. We don’t completely understand where all these actions come from, but we’re happy to see the data.

Albert Lowe: Got it. All right. Thanks for the explanation and thanks again for taking my question.

Operator: Next question comes from the line of Jonathan Wolleben with Citizens JMP. Your line is open.

Unidentified Analyst: Hi. This is Catherine [ph] for Jon. I have a question about kind of putting the preclinical data that you guys have shown. I mean, your mouse model relative to some of the other data that we’ve seen kind of from some of the other compounds. I know that Nova recently extended data from their second generation in at least 347. And I’m just wondering, what is the way to kind of look at this data? I know that it’s animal data, taking it with a grain of salt, but is there anything that can be gleaned as far as the potency of the relative molecules or kind of if you could provide a little bit of color on how to contextualize the preclinical data we’re seeing?

Punit Dhillon: Yeah. I can just kick it off here with just a little bit of differentiation and then turn it over to Chris on — Chris, maybe you want to elaborate just in terms of the comments of these different models on how they’re all unique in order to look at data side by side. I think some experiments have certainly been overzealous in terms of the way that they’ve been positioning just to drive weight loss rather than overall metabolic gain. So I want Chris to touch on that. But regarding on differentiation, the nimacimab is clearly distinguished in terms of a pharmacokinetic advantage. We’re starting obviously with all of the data that we’ve shared over this last week. And even with the PK data that we’ve shared earlier, it’s showing a higher exposure, more sustained peripheral exposure with minimal brain exposure and it’s reducing any of the CNS side effects.

So that’s the clearest differentiation against small molecules. And what’s been evident is that monlunabant and other small molecules have limitations of peripheral efficacy, and partly due to the small molecule mechanism that’s competing with natural ligands and also the potential approach in terms of their binding, in terms of competing against the endocannabinoids at the orthosteric site. And that’s reducing the ability to achieve I think the important therapeutic concentration that is necessary and then once you bring on more drugs, you’re only opening up the issue of more brain exposure. So the nimacimab is unique in terms of its allosteric binding. It’s an antibody. It’s allowing for a safer, higher dosing and without any of this PK/PD limitation that we’re seeing with small molecules effectiveness.

So I think that that’s the clearest in terms of the differentiation. But yeah, Chris, why don’t you kind of elaborate on the preclinical studies a bit more?

Chris Twitty: Yeah. I think backing up just a half second and looking at the potency directly, that question I think is a fair one, and certainly a bias towards beta-resin-based recruitment in terms of a measure of potency. But if we look at the more classic super KNP-based readout, very similar potency, whether you’re a small molecule monlunabant or on the nimacimab. So from a potency perspective, very similar. You can look at our modeling data and that’s pretty clear there in terms of our IC50, IC90 values. I think where, in terms of translating DIO studies, and I think what Punit was alluding to, really the way to do this is in the same study if you want to have that sort of direct comparator in terms of understanding relative efficacy, it can be difficult by clinical trials to do cross-trial comparisons.

It can be challenging and what we typically do to kind of get a soft comparison, if you will, is we use a benchmark where you dose at the same concentration, same dosing schema, and you can use something that’s fairly validated. In this case, we did use some semaglutide at a 10 nanomol per kg dose, and you can see that that sort of had a 5% to 10% weight loss over our dosing range and that is in line with other published research. I would argue more of a suboptimal dose of semaglutide, but if we look at that as a benchmark, we can see that our highest dose of nimacimab actually was significantly improved — had a significant improvement relative to that semaglutide dose. So that’s one way of looking at it and sort of comparing to other therapeutics, benchmarking on semaglutide.

But in the end, we really needed to look at that head-to-head comparison, which is something we’re interested in doing. We haven’t really given guidance on what that will be and when that will come out, but that is something that I think is of interest. But overall, we feel very comfortable with our efficacy profile, especially considering it’s the initial study, and I think we have a lot of room to improve the efficacy results, so we’re really digging into some of the key parameters to understand in this model what is the exposure, what are the kinetics of that exposure, and how do we achieve that inhibition as quick as possible. This is an IP dose that we use, but we’re exploring other routes to really get that inhibition happening quickly and really drive that efficacy down, so more room to optimize the model and drive even better weight loss.

Unidentified Analyst: Thank you so much.

Punit Dhillon: Thanks, Catherine.

Operator: And our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Your line is open.

Ayan Hussein: Hi. This is Ayan for Kristen. Can everyone hear me?

Punit Dhillon: Yes. Hey, Ayan.

Ayan Hussein: Great. Hi. Thank you so much for taking our questions. First question, on neuropsychiatric adverse events, can you walk us through specifically what is happening through central CB1 targeting that leads to these events, and how quickly did others observe this impact in trials? And we’ll give you the confidence that peripheral targeting will not lead to this?

Punit Dhillon: Yeah. I’ll turn it over to Dr. Arora to take that question.

Dr. Puneet Arora: Yeah. I’m sorry, but could you just clarify that question for me again? I heard part of what you said, but I’d just like to be clear about what you’re asking.

Ayan Hussein: I guess the first part of the question is really just trying to get a better understanding of what is happening through central CB1 targeting that’s leading to the neuropsychiatric adverse events.

Dr. Puneet Arora: Oh! Yeah. Okay.

Ayan Hussein: Yeah.

Dr. Puneet Arora: Yeah. Yeah. So…

Ayan Hussein: And the second part is just how quickly others observed that impact in trials?

Dr. Puneet Arora: Yes. So what’s happening is that there are CB1 receptors that are all through the CNS. So CB1 is actually a really important pathway. And I think you can gauge that from even how much peripheral distribution it has in key organs, but certainly in the CNS. And if you look across literature, there are a lot of reports of how CB1 as a pathway and the endocannabinoids, which are the ligands for this in our natural physiological ligands are involved in things like the responses to stress, for example, and maintaining people’s general mood balance and so on. So what happens is that when you have widespread distribution of a ligand to these receptors in the CNS and it blocks it and you block the action of the endocannabinoid receptors, then people lose their ability to respond as well to stress and to get the right responses to it and to deal with anxiety, for example.

So by blocking these pathways, we are putting people who are already prone to getting problems like anxiety and depression to be at a higher risk of developing these problems. And that’s what we saw when we were looking at rimonabant. For example, rimonabant leaks widely into the CNS. In fact, rimonabant was designed quite happily with that purpose, because I think this was not completely understood at that point and we saw these effects. And I believe we see these effects relatively early. So in the kinds of clinical data that we’re seeing right now, you should already be seeing them. And in the month-long Phase 1b study that we saw, we should have seen a glimmer of a signal already in that and we did not see it. You can see from monlunabant t that we are getting some signals very early on.

So this is not something that’s very delayed. To some extent, you’ll see differences between studies in terms of which patients they exclude. So a lot of studies right now are being done at least early on with participants who never had any issues or are not known to be prone to depression or anxiety. But nevertheless, this is a physiological pathway and if you block it in a blanket manner in the CNS, that’s the risk that you engender.

Ayan Hussein: Great. Thank you so much for that. And if I may just ask a second question. With the addition of GLP-1 therapies, how are you thinking about commercial use? Would patients likely start on both and then stay on the CD1 inhibitor for longer-term maintenance? How are you thinking about this?

Punit Dhillon: Yeah.

Dr. Puneet Arora: Actually, all options are open. I’m going to ask Punit to take that.

Punit Dhillon: Yeah. I would just stress that for us, we want to be really clear. I guess we get this question a lot. Obviously, there’s a lot of options that are open there. But what’s important in terms of our takeaway, in terms of that general question, is that we really want to continue to emphasize that our primary focus is to get a regulatory approval for nimacimab and get it across the finish line. And that is, as a monotherapy, to demonstrate weight loss. That’s the way the FDA is looking at it. That’s the way anti-obesity medications have been approved. So certainly, as a non-incretin, there’s a great opportunity for CB1 because it has this multimodal mechanism. And there is going to be a lot of interesting approaches in the post-GLP-1 market in terms of combination and all of that from a regulatory pathway, just so there’s no ambiguity for general investor audiences making sure that the regulatory pathway here is as a monotherapy.

But, yeah, as Dr. Arora indicated, all of our options are open. Of course, scientifically, we’re exploring those and we’ll continue to do that.

Ayan Hussein: Thank you. That was super helpful.

Operator: That concludes the question-and-answer session. Mr. Punit Dhillon, our CEO, I turn the call back over to you.

Punit Dhillon: Yeah. Thank you, everybody, for participating in our first call. And it’s certainly a great moment for CB1 as a class and for Skye developing this molecule. I think what we’ve indicated multiple times, it’s really an opportunity to re-underwrite our understanding of CB1 inhibition, especially with the backdrop of new data that continues to come out in this class and the nimacimab and how it’s really positioned to separate from the pack and we’re looking forward to executing on our development strategy and stay tuned for additional updates.

Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.