Skye Bioscience, Inc. (SKYE) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the 43rd Annual JPMorgan Healthcare Conference. Today, we have the CEO of Skye Bioscience, Punit Dhillon representing. Over to you.

Thank you, Janica. Good morning, and welcome to the Skye Bioscience presentation. It's really a pleasure to be at this venue and the 43rd Annual JPMorgan Healthcare Conference. I just want to take a moment to kind of set and reflect on one aspect here in terms of the therapeutic class that we've been working on. Over the last 2 years, we've all seen this incredible shift in terms of the treatment paradigm of obesity, and the appreciation that it's a chronic condition, but as well as it's starting to -- obviously recognizing that drug intervention is really beginning to treat the underlying disease as well as prevent some of the downstream effects of obesity. So we're no longer thinking about treating just the comorbidities symptomatically. And that's been a really strong thing that really points out that hands down, obesity and metabolic disease are among the most pressing global health challenges of our time. And I'm really excited about this introducing our pipeline and our specific development plan to really address that. Now before I dive in, every great innovation is both promise and caution. So we are going to be making some forward-looking statements and subject to risks and uncertainties, and investors should review our SEC filings and our detailed risk factors. The information that's going to be shared today reflects management's current expectations as of today. At the heart, Skye is really based on a really simple yet powerful idea, right? The best science to redefine and really reframe how we treat obesity and metabolic diseases. We're a leader in the GPCR-based antibody development therapies in metabolic health. We have a flagship program, that's a CB1 inhibitor antibody that's designed to provide for sustainable weight loss with fewer side effects as well as address some of the lingering effects in this class, which has been linked to safety. And our approach really is building on the validated science, and it's really helping to reshape the obesity treatment paradigm, and we'll walk you through that today. Just quickly, a few financial highlights on the capital access side and finance and resource side. We've successfully in -- over the last 18 months, obtained backing from top-tier life science investors, some among who are in the audience today, over $107 million raised in the last 18 months. That cash position takes us until Q3 of 2027. And we'll discuss today where those investments are really being made and how we're harvesting that to really drive for incredible value creation. Execution on our development and overall strategy is really made possible with this exceptional leadership team, some of who are with me today, Dr. Arora, our Chief Medical Officer; Dr. Chris Twitty, our Chief Scientific Officer. Everyone's collective track record really speaks volumes. Collectively over 40 different drugs commercialized, multiple successful ventures co-founded, strategic transactions that have literally shaped the industry. So really happy to be working amongst this team. And we have expertise in the regulatory, clinical and the commercial strategy. And together, I think it's safe to say we're really confident that the broader team as well as how we continue to evolve, we're going to continue to add where necessary to ensure that there's a pathway to bringing nimacimab to the market. In terms of where those investments have been made over the last 12 months, it's been 0 to 100 literally in last -- over the last year. We're a company that's focused on obesity, focused on a broader metabolic pipeline. There has been a huge amount of effort here in terms of focus in the metabolic disease area. Clearly, this includes all the necessary kind of building blocks for value creation. We're expanding on our existing IP. We're generating clinical and preclinical data. We're working with top-tier collaborators. We're focused on near-term clinical milestones. We're also working like with the world-class obesity experts. A lot of conversation about KOLs in the obesity space we have experience across -- in our -- around the table that goes back to the first generation of this class to the frontline treating physicians and influencers in the obesity space, including that are guiding our pipeline. And we're actually excited to share that these insights from them are going to be shared from the company throughout the year. So you're going to directly hear from them as well. Of course, another area that we've been focusing a lot of energy is on the continued GMP and manufacturing readiness to support our clinical trials as well as our regulatory plan. There's many near-term inflection points. I think the most important that we're going to highlight today is the Phase II study related updates, and interim data is now expected to be in Q2 -- by the end of Q2 2025 and final top line clinical data by the end of Q4 '25. And I'll get more into that later in the presentation. All right. We're going to keep zooming in today into our specific product, but I just wanted to widen the aperture a bit to see -- just to frame the obesity market and how that pipeline is shaping up. Obviously, being here at JPMorgan, there's been a lot of great conversations. So I'm going to give you also some real-time information. Clearly, there is success in the incretin mimetic class of therapeutics. This includes the GLP-1 drugs as well as the related dual and triple agonist. But when you think about that, don't worry about the slide at the moment, but if you think about that beyond GLP-1, really the validation has only been in the non-incretins space. It's only been in 2 different targets, and that's been amylin and can maybe include [indiscernible] that as well as CB1 inhibition. And after that, for the most part, it's still yet to be show me story. There's really there yet to be clinical development, clinical validation, clinical regulatory plan. Of course, I'm not saying this is a white -- black and white type of thing, but for the most part, we see that 3 targets are really rising to the surface, incretin and amylin and CB1 inhibition in terms of clear validation, clear development plan, and there's a path to regulatory approval. Now focusing on -- specifically on the information on this particular slide. The current market has really proven that meaningful weight loss is achievable. It's clearly the incretin class has been working, but there's some lingering side effects that remain really a concern, and that's what opens up the opportunity to address that unmet medical need in this area. Specifically, we can improve on the GI tolerability. We can improve on the discontinuation and drug -- and we recognize that drug intervention is required to have this long-term goal of sustainable weight loss. These numbers of 30% dropout rate after 4 weeks are pretty astonishing. That's 30% of patients aren't really staying on the treatment for the minimum 12 weeks to see statistically significant or meaningful weight loss. Now there's really opportunities to improve on those 2 parameters as well as improve on the response rates for those that don't even respond well. This is some early information that we've been able to pull together ahead of JPMorgan that just says 10% to 16%, but we've been digging into this number a little bit more, and it's evident about 20% of patients are nonresponders to GLP-1. So we feel we can improve on all of these parameters as well as improve on a healthier and more sustainable weight loss by further preservation of lean mass. And each one of these buckets represents an unmet need and thereby a sizable opportunity. So there's a number associated with each of these buckets that can then be multiplied when you think about it in terms of the broader market opportunity. Next is the advantages of really targeting obesity through additional mechanisms and specifically the peripheral rather than the central mechanism. We're not disagreeing. There's really a wide opportunity here. But the choice between central and peripheral pathways is more than just a scientific debate. It's really allowing us to then recognize that there's more patient-focused imperatives that can be applied to the heterogeneity associated in obesity, that we have different subtypes of obesity that need to be working -- that we need to look at different mechanisms that work together in order to address that. And central acting drugs, obviously, they work. They show a really good response, but they rely on caloric restriction, and it's causing a significant GI side effect among some of the other things I've already discussed. But peripherally targeting agents and specifically CB1 inhibition, it's promoting fat loss. And it's still indirectly regulating appetite and in the case that we'll cover today, it's really helping to reestablish some of the key metabolic pathways that might have had resistance. So for example, insulin resistance and improving the sensitivity around that, leptin resistance to shift and have a more productive shift in appetite regulation to really curb that caloric input, but do it safely. And CB1, as a reminder, is the only non-incretin target that has been shown to have clinically validated by multiple agents, okay? And I'm going to give you just a bit more color on that here. Just zooming in now on CB1 history, a bit of context. Both rimonabant and monlunabant actually have demonstrated the efficacy of CB1 inhibition in achieving significant weight loss, right? We see this slide here in the first column. Rimonabant and monlunabant achieve up to 6% weight loss at 16 weeks. We have a deeper dive on this, by the way. In the Q&A, we can get into that, but that's on our website. The other side of this is that monlunabant is actually very competitive when you look at it from oral semaglutide as well as if you think about it even close to injectable semaglutide at 16 weeks, with better GI tolerability. So you have a winner there in terms of how that works. The challenge has been the key issue is that it faced dose-dependent neuropsychiatric side effects. And we believe that is a small molecule problem in CB1 inhibition. It's not a large molecule antibody problem, okay? There's a very clear distinction there, and there's been a lot of effort that we put into that. And hopefully, following JPMorgan, if you're interested, we can walk you through the pharmacokinetic profile going through that detail. Now nimacimab, again, is focused on peripheral CB1 inhibition. It's avoiding those CNS-related risks, while delivering effective weight loss. Okay. So obviously, I'm here today to tell you about our strategy there and going to walk -- and I'm going to transition into the nimacimab side. Nimacimab, we believe, by the statement, the treatment paradigm and obesity continues to shift. GLP-1s are going to be a really important backbone. And after GLP-1, there is still room for additional treatments that have paradigm shifting capability that are looking not only just that weight loss, but also this factor of metabolic restoration. We've been playing around with so many different words to frame that. And I really like that one in terms of just imagine being able to kind of reset those metabolic pathways and utilize metabolic restoration. It is an antibody that's engineered for stability and really superior tolerability relative to other drugs that are being used in the anti-obesity landscape right now and other clinical candidates. It's peripheral restriction minimizes that CNS exposure. And to date, our NHP studies have really showed background levels of antibody in the CNS and brain. We've shown no accumulation of the antibody despite multiple weeks of dosing. And our antibody is acting both as an inverse agonist as well as an antagonist. So it's kind of ensuring this dual mechanism of action that's going to help towards efficacy because you have a broader therapeutic window to be able to dose. And we're also noncompetitive in terms of allosteric binding molecule, and that's providing for a really consistent CB1 inhibition and binding confirmation regardless of the endocannabinoid level. So there's a really competitive advantage there relative to the therapeutic window of small molecules, and Chris can expand on that. Now flipping to the peripheral CB1 mechanism, there's a lot of related mechanisms here. The key one that we want to highlight for metabolic disorders and obesity is adipose tissue. By addressing CB1 upregulation and blocking that, we're reducing fat storage and promoting fat metabolism and energy expenditure. That's a key mechanism here that's giving all of these other downstream components of insulin sensitivity, leptin sensitivity, and we'll -- we can highlight a lot more of that. But you also have the opportunity to integrate that same target in tissues that could benefit from anti-inflammatory and antifibrotic conditions that may be comorbidities associated with obesity. So like we talked about here with kidneys, with -- and then even liver and pancreas. So you have the broader metabolic gains that are associated with restoration with CB1 inhibition by targeting all of these tissues, including liver, pancreas and muscle. We do have some key differentiators here on the right side of the slide, where it's -- I've covered a majority of this, but the one thing is that it has an 18- to 21-day half-life, and it provides a really strong target product profile in the class and overall in the anti-obesity landscape. Okay. I made comment earlier about superior exclusion from the brain. And coming back to that in terms of the peripheral restriction, there's been several preclinical studies really that have confirmed the absence of nimacimab in the brain, even at high doses. Phase I data has also demonstrated that there is no neuropsychiatric adverse events in humans, okay? Both of those data points taken together, I would stick my neck out and say this is that it's really serving as the benchmark of data for safety in CB1 inhibition, okay? The preclinical data, the NHP studies that we've concluded and the Phase I. Now obviously, we're looking forward to our Phase II data to continue to recapitulate that same safety signal. This is -- this precision and this comment that we are highlighting around safety is the most important factor that we look at in terms of our TPP. Obviously, we're focused on weight loss and tolerability and lean mass preservation and all of these things. But in this class, one of the key reasons we're developing this drug is we believe this specific antibody is the safest in terms of being able to make a difference for these patients. And we're not interested in compromising that safety at the efficacy kind of looking at that from a kind of a dual-edged sword. At this point in the treatment paradigm, we don't need to compromise safety in order to have efficacy, I think, in weight loss. It opens up the door to a completely new mechanism of action for a sustainable weight loss. That's the key thing in terms of when you're trying to ascertain how does this fit into the commercial landscape. This is how we're differentiating ourselves against the incretin class. Okay. There's also been a really good amount of data now that's been generated, that's going beyond the safety and the PK data that I'm highlighting and generating now the important PD data to highlight that peripheral sufficiency for weight loss. This whole idea that can you drive that competitive weight loss by only targeting the receptor in the periphery. And this is the first set of data, which we just shared last October at a satellite event at Obesity Week. And we run an efficacy study using a diet-induced obesity model in a proprietary human CB1 knock-in mouse model. And here, you can see nimacimab treatment led to a clear dose-dependent reduction in body weight with the highest dose of 75 milligrams per kg, providing the most dramatic effect, and that weight reduction was also driven by fat mass loss rather than muscle. And we also saw a significant preservation of lean mass. And when you're comparing it against semaglutide side-by-side, we're also seeing in our experiment that we have exceeded semaglutide in terms of weight loss and fat loss and demonstrated meaningful metabolic improvement overall. There's another part of this experiment that is not on this slide, which is the glucose tolerance that we've already shared. We also saw a dose-dependent improvements in glucose tolerance with lower blood glucose levels during glucose tolerance test, which is another really important key metabolic marker. So we are still evaluating hormones, leptin, insulin as well as some lipid and inflammation markers. And you're going to have additional data that's coming out of this existing study as well as overall our DIO model in related studies that will be available this year. And Chris and his entire team are working on that. In fact, just if you kind of look at that a little deeper, we're working on several simultaneous points of reference for describing the mechanism of nimacimab. This idea of metabolic restoration and coordinated metabolic effect is looking at parameters of how CB1 inhibition is really driving that in multiple tissues. So this is just a slide kind of capturing how we have now been able to see that effect directly in adipose tissue, liver, pancreas, muscle, and these are important in terms of how it really differentiates against the current anti-obesity medication landscape. And this is another visual of kind of how that would fit, right? All those Xs is that gap that the incretin class doesn't address. And in the blue column, you can see that CB1 is really able to help be complementary and drive a coordinated effect. So the key thing here is it's not just about weight loss. It's about a holistic metabolic health and that metabolic restoration by targeting adipose tissue, liver, muscle tissues, all of these are working well together. Now briefly, if you look at the target population and a lot of discussion around obesity, obviously, every day, we hear about it in the headlines. But when you look at the unmet medical need and how it's not being fulfilled with the current treatment paradigm, again, going back to my earlier comment, it's really important to keep in mind that obesity has many different subtypes that are broader than just one opportunity that might be evaluated, just seeing top line weight loss as the percentage is not to be in at all. The market that we discussed earlier about nonresponders, okay? There's the patients that can benefit from combination to address comorbidities. There's the patients that come off drug, the discontinuation rate. There's the patients that have to have maintenance. All of these are complementary in terms of metabolic restoration. So not every patient is going to benefit, nor is it healthy to think that the benchmark weight loss that we've seen is the bar that's been set by GLP-1 is what is going to be what the future is. We believe the overweight population and Class I population in terms of how it's been defined, there's tremendous opportunity, and these are millions and millions and millions of patients that are affected. Now just in terms of a figure to look at that in terms of what we're expecting in our clinical trial, this is a visualization. We're really trying to drive and demonstrate sustainable, consistent weight loss in the orange you're kind of seeing that there's this effect that you take -- that happens when you take GLP-1. When you come off drug, you rebound and regain weight. Here, that's what's kind of being illustrated. And we're trying to overcome that with nimacimab being a slow consistent weight loss that's a more better quality of weight loss. And then to be additive with that blue line there, we expect to show that this mechanism then preserves lean mass, while reducing fat mass and also not having significant GI and, of course, no neuropsychiatric adverse events, and it really can amplify in combination with GLP-1 and amplify the overall therapeutic benefits. And that brings us to how we're evaluating that in our Phase II trial. So this specific design that we have is tackling a lot. There's a lot to unpack here. But briefly, I will just say we're conducting a Phase II study. It's evaluating the nimacimab. It's a study named CBeyond this program has 4 treatment arms, including a double-blinded portion with nimacimab, monotherapy and placebo, which is highlighted in red. And then there's a partially blinded where nimacimab is being combined with semaglutide as well as sema alone plus [ a nima ] placebo matching. The primary endpoint here is demonstrating 8% mean weight loss difference at 26 weeks. The secondary endpoints are safety, neuropsychiatric evaluations. Obviously, that's including that and then body composition changes. And then there's a range of exploratory endpoints that we also have, which are looking at metabolic markers like insulin and triglycerides. And we are also doing a follow-up. So we're completing a 13-week follow-up on these patients to see the durability of weight loss as well as these other endpoints that I just mentioned. In terms of expectations on the data, as I outlined, there's really several endpoints in the study, and this is why we think this is probably the most meaningful obesity-related data point that's coming out in 2025. Clearly, 2024 was a heavy calendar year for GLP-1 data, a lot of parse data -- sparse data in terms of different weeks, different data points, different agents. Here, we're doing everything in one study, okay? So you're going to see interim analysis at 26 weeks based on 50% of these patients in all those cohorts. So you're going to have weight loss data comparing mono, placebo, combo and sema as well and as well as body composition data and, of course, safety across all those arms. It's going to be the most robust data set you'll see in CB1 inhibition, we believe, in this second generation of agents. Also to note, the final top line data by Q4 '25, which is going to include all those parameters as well as the follow-up data. That 13-week follow-up data will be included in that. All right. In terms of just how this all puts together in terms of the road map. Obviously, our macro strategy extends beyond just a single product. We haven't shared that. And as we have additional data, we will share how that expands. But in terms of how the Phase II program is leading to the development of nimacimab with this data that's expected in Q2 2025, it's really guiding our Phase IIb and Phase III programs related to nimacimab and obesity. We're obviously continuing to make active investments in R&D, manufacturing, IP, core collaborative partnerships to ensure the long-term success in meeting this. We have the cash to execute against this plan, and we're really looking forward to executing against that. And just to wrap it up in terms of summary, I can't stress enough that we expect nimacimab safety and efficacy profile as well as our overall target product profile to have the confidence to meet the gaps in the current market. And we expect that if we hit those gaps and hit those benchmarks, that we're going to have a considerable amount of uptake. And it's going to be a cornerstone in the future of obesity medication because there's still lots of room. A lot of comparisons are always made to the oncology area and the market size there of KEYTRUDA and so forth. We're talking about 4 to 5 size of the checkpoint inhibitor space in the metabolic disease, obesity, space. So there's lots of room for additional agents, especially those that are addressing some of the unmet need with nimacimab. Look forward to those data points and us communicating that education from speaking to the front line of what's happening there. This year, our goals here are to complete enrollment by Q1. We're on track to do that. The study has enrolled incredibly well. It's across the entire U.S., 16 sites, including academic centers. And then we expect to share a really meaningful data set in late Q2 based on that study as well as in the top line data I mentioned. That's it. And I'll take any questions, and my colleagues here are available as well.

Just a question from me on the clinical development and time lines. So Skye has noted a target end of Phase II completion in 2027 for nimacimab. How are you tracking to that time line?

Yes. I can start, and do you want to take that?

Sure. I can start that, and you guys are free to add on to it. So just -- I'm Puneet Arora, I'm the Chief Medical Officer at Skye. We -- as Punit showed you, we are in our Phase IIa study right now. We're recruiting really well. We've been gratified by the enthusiasm of sites, our PIs, our patients. In November, we announced that we had recruited 50% of our patients for that study, which is a really important benchmark because it leads us to the interim analysis that Punit talked about, which will come midyear. We are on target to complete that -- the enrollment of that study and to complete that study in a timely manner as well. And later this year, in Q4, we should have top line data for the whole study. So midyear, we'll have 26-week data for you. So it will be meaningful, and it will be from all the cohorts in the study. We intend then to, in an accelerated manner start a robust dose ranging study, which will be required in order to identify the best dose for this drug and get more data around what nimacimab is capable of doing. And we expect to start that -- start preparations for that after we have this data in hand. And we expect that by sometime in 2027, we will have data from that as well. So that should allow us to go for an end of Phase II meeting.