Ladies and gentlemen, thank you for waiting. My name is Joel, and I will be your conference operator today. I would like to welcome everyone to the Skye Bioscience Second Quarter 2025 Financial Results and Business Update Call. I will now hand the conference over to Bernie Hertel, Head of Investor Relations. Please proceed.

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 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, Skye's President and CEO.

Good afternoon, everyone. Today, we have most of our executive team participating in our financial results and operations update through prepared comments, or they're available to address questions during the Q&A. As we often say, we've managed the course with discipline, and we're now approaching the point where preparation becomes proof. This quarter marks a notable prelude to our reporting of our Phase IIa data for nimacimab, Skye's differentiated peripheral CB1 inhibitor in terms of execution as well as the clarity arising from the convergence of key activities, including the progress of our Phase IIa study, understanding of the mechanism of nimacimab, and planning for next steps relating to our clinical development thesis. On today's call, we'll walk through the progress we've made, the data that we've generated and the path we're charting forward. We'll cover three key areas: one, clinical progress, where we stand on our Phase IIa program and the top line timing; two, R&D foundation, how we believe our antibody approach to CB1 inhibition is mechanistically distinct and supported by reproducible preclinical data; and three, where nimacimab fits, positioning our asset within the evolving obesity treatment landscape, including gaps we believe are overlooked and not readily fulfillable with other mechanisms. Let's begin with the clinical progress. The Phase IIa CBeyond is advancing as planned, on budget and ahead of schedule. Enrollment was completed in February, ahead of schedule and the 26-week visit for the last patient is projected to occur very shortly. The 26-week extension study is also now underway with both the monotherapy and combination arms enrolling. Approximately 50% of the patients from the original study are eligible for enrollment, and we're optimistic that a majority of the eligible patients will choose to participate in the extension study. The Data Safety Monitoring Committee has now reviewed the study four times and issued no recommendations for changes. This has been an effectively managed program from timeline management and data capture on various endpoints to regulatory coordination from the initial IND to the recent protocol updates to facilitate the 26-week extension. We look forward to completing treatment of our final enrolled patient for this first segment of CBeyond and then stepping into the data analysis. We remain on track to deliver top line results by late Q3, early Q4. Next, let's discuss R&D. As a reminder, nimacimab is a fully humanized, peripherally restricted CB1 antibody designed to target a well-established metabolic pathway, but to do so without the central toxicity that has historically limited CB1 inhibitors. We differentiate from non-antibody CB1 inhibitors in two fundamental ways: one, from a distribution standpoint; and two, mechanism, both advantages that support a broader therapeutic window and target engagement in the periphery. Let's focus in on peripheral restriction. Nimacimab shows negligible brain penetration across many different species. It's confirmed through PET imaging, cerebral spinal fluid analysis and postmortem tissue assessments. Even at high and repeated doses, the molecule remains peripherally compartmentalized. Next, let's talk about mechanism, allosteric noncompetitive inhibition. Nimacimab binds at the allosteric site of CB1, retaining potency even in the presence of elevated endocannabinoids, which is commonly associated with the obese state. This is in contrast to small molecules that bind to the orthosteric site of the CB1 receptor, which may face increasing competition to bind to the receptor and can lose efficacy in the presence of high concentrations of endocannabinoids. We've evaluated this molecule through multiple preclinical studies using our human CB1 knock-in DIO mouse model. Based on these DIO mouse studies, we believe there are at least four distinct yet converging mechanisms that define nimacimab's action and form our platform's scientific core. One, caloric restriction via peripheral hormonal coordination. Nimacimab reduces food intake by acting on adipose and gastrointestinal tissues to modulate appetite regulating hormones such as GLP-1, leptin and resistin. This enables a peripherally-mediated reduction in central appetite signaling without requiring brain exposure. Two, improvement and restoration of glycemic control. We see consistent improvements in fasting glucose and insulin with significant improvements in glucose tolerance in DIO models, supporting nimacimab's relevance for patients with prediabetes or insulin resistance. Three, enhancement of lipid metabolism. Nimacimab reduces steatosis and circulating cholesterol levels, a direct benefit for patients with obesity-linked metabolic comorbidities like NAFLD or dyslipidemia. Four, reduction of obesity-induced inflammation. Nimacimab reduces the level of key serum inflammatory mediators and macrophage infiltration in liver and adipose tissue, pointing to a disease-modifying role of nimacimab related to comorbidities of obesity. These effects seen in our DIO models are robust, reproducible and mechanistically distinct from, though complementary to, incretin-based agents. That gives us potential optionality across monotherapy, combination and maintenance strategies. Okay. Let's dive into that last point and touch on the new preclinical data that was shared today. To test how nimacimab could perform in real-world settings, we recently conducted a preclinical DIO study asking three key questions: one, can nimacimab enhance the efficacy of a suboptimal dose of tirzepatide? This is highlighted by the yellow part of the study schematic. Two, does nimacimab offer a more durable weight loss profile post treatment? This is highlighted by comparing the yellow to the blue part of the study schematic. And three, can nimacimab act as a maintenance or rescue therapy after incretin discontinuation? This is comparing the yellow to the pink color as a clear control. Here's what we found. First, the combination efficacy. The preclinical DIO study findings demonstrated that at day 25, the combination of nimacimab and a suboptimal tirzepatide dose of 3 nanomoles per kilogram daily yielded 44% vehicle-adjusted weight loss. The combination outperformed either agent alone with nimacimab demonstrating 21.5% vehicle-adjusted weight loss and tirzepatide demonstrating 29.7% vehicle-adjusted weight loss. The combination efficacy also exceeded an optimal dose of tirzepatide of 10 nanomoles per kilogram daily, which resulted in 38.9% vehicle-adjusted weight loss. This highlights a meaningful opportunity to develop combination strategies that achieve greater efficacy at lower doses, potentially improving tolerability, reducing cost, and expanding treatment accessibility. Now point number two, nimacimab demonstrated durable post-treatment weight loss compared to incretin therapy after the therapy stopped. In comparison of nimacimab and tirzepatide following cessation of treatment in the preclinical DIO mouse model, nimacimab demonstrated superior durability of weight loss. Specifically, the low-dose tirzepatide group regained most of their original weight back eight days after coming off therapy, regaining 29.7% of weight by day 24 post treatment. In comparison, the nimacimab treated group maintained their post-treatment weight for approximately 20 days, regaining only 7.4% by day 24. This rebound effect has been well documented in animal models and clinical data and represents a major issue for patients who come off incretin-based therapies. Nimacimab's durability after cessation of therapy represents a potentially clinically beneficial and distinct outcome relative to incretin-based therapies. Let's move to the third point and now add back nimacimab. Here, we're looking at maintenance of weight loss using nimacimab alone post incretin treatment. When nimacimab alone was used after an initial tirzepatide or combination treatment in the preclinical DIO mouse model, it greatly reduced rebound weight gain in these bottom three groups of mice, the suboptimal TRZ and nimacimab combination in purple, the optimal TRZ dose in red, and the one we're going to zoom into is the suboptimal TRZ following nimacimab, which is in pink. The key takeaway, no matter which of these line graphs you're looking at, is that the data show nimacimab reinforcing its potential role as a post-incretin weight loss maintenance therapy. And specifically, when nimacimab was added following treatment with low-dose tirzepatide, the pink line, nimacimab reduced rebound weight gain from 29.7% to 12.8%. Taken together, these data suggest nimacimab has utility across a broad continuum of care, not just initiating weight loss, but also sustaining it. This continues to strengthen our thesis and bring us to the real-world setting and answering where nimacimab fits and understanding the real-world therapeutic gap. Again, we're not trying to displace GLP-1s. We believe they are foundational and their backbone, but they also have well-recognized limitations. 58% of patients discontinue before 12 weeks, 80% by year 2, up to 40% of weight loss can come from lean mass, and GI side effects remain a major driver of treatment discontinuation and patient dissatisfaction. This ultimately creates a significant therapeutic gap and one that nimacimab is designed to address. There are three market opportunities: one, as a monotherapy for patients who can't tolerate or don't respond to incretin therapeutics; two, as a combination partner to amplify efficacy or reduce incretin dose burden; and three, as a maintenance therapy to sustain weight loss after a desired weight is achieved with better tolerability. As developers are racing to optimize potency, dosing and formulation, the field is now bumping up against a real-world ceiling, tolerability. And despite their clinical efficacy, incretin-based drugs are facing significant discontinuation rates, up to 50% within the first year and nausea is the most frequently cited reason. As illustrated here, many of the late-stage programs cluster in the high nausea, high dropout zone, trading gastrointestinal burden for marginal weight loss gains. This has created a therapeutic paradox. There are actually stronger agents, but they have a weaker persistence. We believe that this is not just a side effect problem. We believe it's a structural vulnerability in the current obesity treatment paradigm, and it's leaving a growing population of patients without sustainable options. That's where nimacimab comes in. Rather than replicate what's already been done, nimacimab is designed to potentially expand the therapeutic options in obesity treatment, not only as a well-tolerated and effective monotherapy, but as a differentiated and essential combination where the current incretin saturated market does not provide such options. Its mechanism offers alignment to GLP-1s, unlocking the combination potential without compounding the GI burden. This positions nimacimab to potentially meet the needs of patients who discontinue using the drug due to side effects, who fail to sustain weight loss or who require multi-pathway intervention for broader metabolic impact. For us at Skye, the opportunity is clear. Nimacimab is not just an alternative. We believe it's a next-generation backbone candidate for durable, combinable and more accessible obesity care, and it's a platform that can potentially extend beyond monotherapy to life cycle expansion across lines of therapy and patient segments that are currently underserved by today's options. And this is a key area to zoom in on, and we've been working on how best to frame it within the broader obesity treatment landscape. We believe we're entering the fourth wave of obesity pharmacotherapy, a new phase that's driven by scientific innovation still, but needs to address real-world complexity in patient care. The FDA has now approved six drugs for long-term obesity treatment, each marking a step forward in the standard-of-care, from short-term stimulants to safer agents like Orlistat to the rise of GLP-1-based therapies such as semaglutide and tirzepatide, which have brought us closer to disease resolution, but a new chapter is unfolding. Today's obesity market is evolving beyond the singular goal of caloric restriction. The next generation of anti-obesity medications such as the peripheral approach is being shaped by the need for broader metabolic impact, targeting pathways related to insulin sensitivity, lipid regulation, inflammation, and central reward signaling. This reflects a shift from weight loss alone to true disease modification, sustainable weight loss, and even addressing the other related comorbidities. With the top line data ahead, we're preparing to potentially demonstrate how nimacimab delivers on the core needs of the evolving obesity treatment paradigm that, in our opinion, fit the definition of the fourth wave by improving quality and durability of weight loss through alternative metabolic pathways, better tolerability, and strategic combinability. Thank you, again, for listening to our update, and I'll wrap by emphasizing that the next 90 days will be busy, and Kate's going to walk you through a few of our upcoming milestones in her remarks. Overall, for us, finishing Q2 and heading into Q3 isn't just a checkpoint. It's a culmination of disciplined execution, scientific clarity and focused investment in a differentiated mechanism. We appreciate your continued support, and now I'll turn the call to Kate, our CFO.

Thanks, Punit. After the market closed today, we issued a press release and filed Skye's Form 10-Q 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 key financial results for the second quarter ended June 30, 2025. We ended the second quarter with cash and cash equivalents and short-term investments totaling $48.6 million. Our cash flow guidance remains intact, with the expectation that our current capital is projected to fund operations and key clinical milestones through at least Q1 2027. This includes the completion of our Phase IIa study for nimacimab and certain Phase IIb manufacturing and preparatory clinical activities, including the initial manufacturing runs needed to start the Phase IIb dose-ranging study and clinical feasibility activities. In addition, our runway also includes a modest discovery research and development budget and the formulation and development work expected to support later-stage studies for nimacimab. Research and development expenses for the three months ended June 30, 2025, were $14.3 million as compared to $4.1 million for the same period in 2024. The increase was primarily due to contract manufacturing, clinical trial costs associated with our clinical study for nimacimab, discovery, research, and development expenses and salaries and stock-based compensation expense. General and administrative expenses for the three months ended June 30, 2025, were $3.9 million as compared to $4.3 million for the same period in 2024. The decrease was primarily related to decreases in general business expenses and legal and professional fees, offset by increases in salaries and stock-based compensation expenses, consulting and advisory fees, along with investor relation costs. Our net loss for the three months ended June 30, 2025, totaled $17.6 million, including noncash share-based compensation expense of $4.2 million. This compared to $7.9 million for the same period in 2024 with noncash share-based compensation expense of $4.3 million. In Q2, we maintained our track record of execution, hitting clinical milestones while managing capital with precision. We continued to build internal cadence and operational rigor, including the strategic expansion of our team to 20 employees. We made key hires in regulatory affairs, quality, clinical operations, and CMC. Notably, we welcomed a Vice President of CMC to directly support our advancing development activities. This deliberate scaling is intended to allow us to minimize downtime between clinical trials and stay positioned to move quickly following upcoming data readouts. As we enter the second half of 2025, we remain focused on disciplined execution and are well positioned to advance nimacimab through its next development phase. We are entering what is arguably the most crucial execution period in Skye's history. To outline what you can expect in the coming months: on September 4, we will host a KOL event at NASDAQ, which will be webcast live focused on the mechanism, CBeyond Phase IIa clinical data expectations and market positioning. In addition, in the fall, we are participating in multiple investor conferences where we look forward to engaging directly with many of you. Finally, ahead of our top line data, we are presenting the Phase I SAD/MAD NAFLD data at EASD on September 19, reinforcing hepatic and metabolic benefits. In late Q3, early Q4, we expect our top line clinical readout from CBeyond. As we have previously stated, this will be data from both the monotherapy and combo arms with placebo-adjusted weight loss, safety, body composition, and mechanistic biomarkers. With the top line data in hand in Q4, we expect to finalize the Phase IIb protocol, further advance CMC, initiate regulatory engagement and external planning for next phase studies. 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.

Your first question comes from Ted Tenthoff of Piper Sandler.

Getting excited for data. I had just a little bit of a housekeeping question, but with a specific angle on it. So R&D was higher. I saw that you've made some progress on the manufacturing lines. Did that account for a big part of it? And in the press release, you mentioned this Arecor, A-R-E-C-O-R, and a potentially higher concentration nimacimab formulation. Can you tell us a little bit about what the goal is from that and when you may be able to use that higher concentration nimacimab?

Thank you for joining the call. This is Punit. I will discuss the Arecor relationship. Currently, we have a concentration of 200 mg per 2 ml or 100 mg per ml in use at the clinic. Our objective is to increase this concentration for longer or less frequent dosing, potentially reaching 200 mg per ml. Arecor is assisting us in this endeavor, which is part of a separate R&D track that does not interfere with our clinical development strategy. Our clinical development and CMC efforts are on schedule to advance nimacimab. As we look for opportunities in life cycle management, we are focused on improving concentration. Kate, would you like to address the financial aspect?

Yes, sure. So there was approximately $9.1 million that we spent during the six months ended on contract manufacturing costs, and that related primarily to the Phase IIa resupply for the extension study and the supply for the Phase IIb trial as well.

Your next question comes from the line of Jay Olson of Oppenheimer.

This is Matt on for Jay. Congrats on all the progress. So as we near CBeyond data, just curious, I guess, what you're thinking for nimacimab's weight loss efficacy potential at week 26. Should we expect to see something around 8% or if it's slightly below that, would the range of around 5% to 8% be potentially compelling? And then I guess, additionally, beyond weight loss and obviously, safety, what other key metrics will you be paying attention to? And what biomarkers do you believe could be informative as well? Really appreciate it.

Matt, thanks for joining and taking the call on behalf of Jay. Yes, so we are looking at Phase II, the CBeyond trial, the Phase IIa really as a proof of mechanism study. It was originally designed to detect an 8% placebo-adjusted difference in weight loss with 80% power over 26 weeks. So our goal here is to demonstrate a really clear clinically meaningful weight loss separation from placebo. And as you alluded to, we believe that if we're seeing 5% to 8% range placebo adjusted, that's really a strong signal of biological activity of nimacimab. Importantly, the study was not powered really to detect a smaller difference with any statistical significance. So that's an intentional component because otherwise we would have required a way larger study. So the objective here is to validate the mechanism, establish a really strong safety and tolerability profile, and really proceed to a definitive dose-ranging study to identify the optimal dose and then the ultimate regimen for nimacimab in a Phase III setting. And our goal here is to deliver obviously consistent weight loss, improve GI tolerability profile. I think we alluded to that today in terms of where there's a lot of white space in the market, and that's where we feel we have really the upper hand. And obviously, a clear safety signal without any neuropsychiatric side effects. So all of those three parameters, we would consider CBeyond a success, and it really puts a strong foundation to move forward with Phase IIb for us.

Okay. Got it. That makes sense to me. Really appreciate it. And just a quick follow-up. If you have any expectations on the potential discontinuation rate within 26 weeks and also how, based on your expectations, you believe that could translate into an advantage versus GLP-1s in the real-world setting? And also just to clarify, as you previously said you expect about 50% of patients from the original study to be eligible for the extension study. If you could just walk us through your thinking there, that would be great.

Yes. So Dr. Arora, you can take the 50% approximate on the extension study. Let me walk you through the other pieces of your question. So in terms of discontinuation, we're expecting the similar trends we're seeing in most obesity studies. Now keep in mind, in the last two years, I think overall across all obesity studies, we've seen probably about 25% to 30% discontinuation. And I don't think that's a factor of always the drugs. It's also a factor of a very competitive landscape and the accessibility of just commercial drugs and access to new modalities. And a lot of patients are looking for that access. So we haven't seen any unusual trend in terms of discontinuation in our study and definitely not seeing anything related to safety. But in terms of the real-world situation, as I alluded to in the presentation, there's a really large opportunity here where we're seeing 50% of patients not continuing incretin therapy after a year, right? And that's where this maintenance data really showcases. And here, we can essentially capture those patients and continue on with drug and allowing patients to have that long-term sustainable weight loss. So I think there's a really clear market opportunity there where nimacimab's not really competing for that initial weight loss that incretins do, but it's designed to really lock in those losses that once the incretin therapies do their work, then we can see that there's an application there in a really large market. And obviously, there's still an opportunity there in the monotherapy setting too, because there's patients that don't respond. I hope I answered those two questions. I'll turn it over to Dr. Arora to just talk about extension study and those expectations.

Yes. So thank you. The extension study enrollment has started. I think I'll just start with the good news. We've been enrolling for the last month or so patients in the combination arms, and we are also now enrolling patients in monotherapy. Just between the logistics of starting the extension and allowing patients to roll in. As you know, we didn't initially plan for an extension, but we've been able to execute on it. Between that and the natural early terminations that you get in an obesity study, we still believe that about approximately 50% of our original patient target will be eligible to roll over into extension. And it's just started. So I can't give you any precise numbers. But just based on the enthusiasm at the sites and from what we hear, we are very optimistic that a majority of these patients are going to roll over because we see a lot of interest in it.

Your next question comes from the line of Jon Wolleben of Citizens.

Punit, you laid out a nice optionality between maintenance, monotherapy combo. How do you think about what we'll see in CBeyond and how that might guide development and the different utility in those three different modalities for nimacimab?

Yes, that's an excellent question. Thank you, Jon. I believe there is a significant opportunity for a broader maintenance franchise that is likely underappreciated in the market because we are in a rapidly evolving landscape. This week, for instance, we've observed key developments from other obesity drug developers, and everyone is trying to determine the outcomes. I see a clear opportunity for nimacimab across all three settings. In monotherapy, our primary research indicates that about 10% to 15% of patients do not respond to GLP-1 therapy, representing a substantial opportunity for us. In the maintenance setting, we've noted some crucial statistics: around 50% of patients discontinue treatment after one year and 80% after two years. This highlights a real need for a drug that can effectively engage this patient population with minimal gastrointestinal side effects, and we aim to avoid exacerbating the tolerability issues associated with incretins. The third opportunity lies in combination treatments, which will depend heavily on evidence-based data. So far, we've demonstrated that using a suboptimal dose of tirzepatide in combination with nimacimab can lead to greater weight loss. In practical terms, this suggests that patients might manage better with a more tolerable dose of incretin therapy while we compensate for the weight loss difference through another method. This underscores the distinct biological pathways that CB1 and GLP-1 are targeting. Tu has been conducting extensive market access research, and I'd like to give him a few moments to expand on my comments.

Yes, thank you, Punit. I believe you have covered all the key points. It's important to note that when we engage with key opinion leaders, they express significant enthusiasm for new treatment modalities that extend beyond just incretins. They desire the capability to offer their patients additional mechanisms of action that could be more tolerable, provide varied benefits, and cater to patients who may not need substantial weight loss but still need to address other health aspects. These are crucial insights that I think the market is starting to recognize—that weight loss as a singular metric will not be the primary focus as new drugs and therapies, particularly non-incretin options, emerge along with relevant data. The significance of complementary mechanisms and various endpoints will become increasingly important.

Yes. And just to add to that, looking at the orforglipron data today, there's still a clear opportunity here that orals are not necessarily going to save the day in a maintenance setting. They don't necessarily add any more substantial weight loss. But here, we've now pointed to a completely different biology, a peripheral mechanism may be enhancing that weight loss. So I think from a competitive positioning snapshot perspective, there's clearly room from an efficacy standpoint. We'll see what that data looks like in the clinical setting now. There's a maintenance franchise, which we're starting to, I think, understand better. And there's a really clear safety moat, right, with the peripheral exclusion on the neuropsychiatric side, as well as the tolerability profile to date. So those three things, I think, really stand out from a competitive positioning perspective.

Your next question comes from the line of Kristen Kluska of Cantor Fitzgerald.

Hi, this is Ayan on Kristin's line. Congrats on the progress here. First, regarding the independent board that oversees the trial for safety, could you just remind us what the protocol is here? What types of adverse events would they report? And then second, I know you touched on this already, but I just wanted to get some clarification around the enrollment eligibility in the extension study and how about 50% of the patients from the original study made the cut.

Sure. Thanks for joining today. And I'm going to let Dr. Arora, Chief Medical Officer, take both of those questions. The DMC meets quarterly and receives all the safety data from the study. We provide them with a comprehensive list of all adverse events, serious adverse events, and any adverse events of special interest reported. They also have full information on all patients, including narratives and lab results. This gives them a complete set of unblinded information to work with when reviewing the study data. They can request clarifications, ask us to monitor specific aspects, or inquire about individual patients. To date, we've completed four reviews, the latest one being on July 18. Other than some minor clarifications and specific inquiries about certain patients, there haven't been any significant issues. After each meeting, they have expressed that they are comfortable with the study continuing as planned.

And then the second question on just a clarification around the enrollment eligibility in the extension study.

Yes. Patients who complete their dosing for 26 weeks are eligible for enrollment in the extension study. However, anyone who does not finish 26 weeks of dosing is not eligible. The delay in designing the extension study after starting the original study has made it take longer to get it going and secure all necessary approvals and site setups. As a result, we lost some patients who would otherwise qualify to transition into the study. When we mention 50%, it does not imply that only half are ineligible. Many patients are not eligible because they completed the study before the rollover period began. Additionally, we’ve observed some dropouts, which is consistent with trends in our other studies. Considering these factors, we anticipate that about 50% will be eligible.

Your last question comes from the line of Albert Lowe of Craig-Hallum.

Just a quick one for me. I know the original study design had this 13-week follow-up period to track for durability of weight loss. And I was wondering if the follow-up period after the extension study still has this follow-up period to look for durability and rebound weight gain? And in either case, when might we see data from either portion of CBeyond?

Hey Albert, thanks for joining the call today. Yes, that's a great question. We're going to continue to have that 13-week follow-up, but that probably won't be available until the first half of 2026 in terms of that part of the data readout. So now with the extension, we will finish the 52 weeks and then all those patients will be tracked for a follow-up 13 weeks, and that data would be available. So that's more of a 2026 event now.

Thank you. There are no further questions at this time. This concludes today's conference call. We thank you for your participation. You may now disconnect.