Skye Bioscience, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Skye is a clinical-stage pharmaceutical company developing therapies that modulate the CB1 receptor. It has not generated revenue and expects no product revenue unless candidates are approved and commercialized or it enters revenue-generating collaborations.
Financial highlights
| Metric | Q1 2024 | Q1 2023 / prior period |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $1.95 million | $1.18 million |
| General and administrative expense | $4.21 million | $1.92 million |
| Operating loss | $6.15 million | $3.10 million |
| Net loss | $5.02 million | $5.17 million |
| Net loss per share | $0.18 | $1.37 |
| Cash used in operations | $4.71 million | $4.06 million |
There are no revenue or gross-margin figures because the company has no revenue. Net loss was slightly lower despite higher operating expenses, primarily reflecting a $1.15 million gain on sale of real estate and higher interest income; Q1 2023 included debt-conversion inducement and wind-down costs.
At March 31, 2024, cash was $83.34 million and restricted cash was $9.08 million, compared with cash of $1.26 million at December 31, 2023. Working capital was $78.77 million; total assets were $94.84 million and stockholders’ equity was $78.88 million. Restricted cash secures an appeal bond. The company reported $5.0 million principal on a related-party convertible note, due August 18, 2024, bearing 10% stated interest; its carrying value was $4.61 million. The note’s estimated fair value was approximately $10.16 million.
Cash provided by financing activities was $85.65 million, principally from January and March private placements; investing activities provided $1.14 million, mainly from the real-estate sale. The cash-flow statement reports financing proceeds net of equity issuance costs, while the equity statement reports $83.56 million net issuance value and $2.10 million of accrued placement-agent fees. The filing states that available cash is expected to fund projected operations for at least 12 months from issuance of the financial statements, and management believes the financings can fund both planned clinical trials through top-line Phase 2 data.
Material changes and business developments
- Operating expenses increased 98% overall. R&D rose 64%, mainly due to Phase 2a glaucoma trial costs and preparation for the obesity study. G&A rose 120%, primarily due to compensation and stock-based compensation tied to performance milestones.
- In January and March 2024, Skye completed private placements for approximately $90.0 million gross proceeds and approximately $83.6 million net proceeds as reported in the equity statement. The January financing included 9.98 million pre-funded warrants; these are equity-classified and exercisable at $0.001 per share. Common shares outstanding increased to 28.06 million at quarter-end.
- Q1 stock-based compensation was $2.48 million, versus $0.13 million a year earlier. Unrecognized compensation cost was $14.40 million at quarter-end.
Outlook, risks and contingencies
- Skye completed enrollment in its Phase 2a SBI-100 Ophthalmic Emulsion study in February 2024 and expected data in Q2 2024. It planned to launch a Phase 2 nimacimab obesity trial, including a GLP-1 combination study, in Q3 2024, with final data expected in late 2025. These are forward-looking expectations, not reported results.
- The company expects R&D and G&A costs to increase as clinical development and public-company support needs grow. Clinical outcomes, regulatory approval, manufacturing, suppliers, trial timing and the ability to raise or manage capital remain significant uncertainties.
- In the Cunning lawsuit, a jury awarded damages and the court awarded attorney fees. Skye recorded a $6.05 million legal-contingency liability plus $0.31 million accrued interest and posted a $9.08 million appeal bond. The appeal is ongoing; the company says the recorded contingency could materially change. Skye is also pursuing insurance coverage of up to $5 million, less the deductible, in a separate dispute with its D&O insurer; recovery is uncertain.
- The filing identifies potential Nasdaq continued-listing and clinical-product manufacturing risks. Management concluded disclosure controls were effective at a reasonable-assurance level and reported no material change in internal control over financial reporting during the quarter.
Key facts for investors to verify
- Whether SBI-100 OE Phase 2a results were reported after the filing and how they compare with management’s stated expectations.
- Whether the nimacimab Phase 2 trial began on the planned schedule and whether trial costs or timelines changed.
- Cash burn, financing runway and dilution from outstanding warrants and equity awards; the filing lists 13.26 million warrants outstanding at March 31, including pre-funded warrants.
- Repayment, conversion or refinancing of the $5 million related-party note due August 2024.
- Developments in the Cunning appeal and insurance-coverage litigation, including any change to the contingency estimate or recovery prospects.
- Reconciliation of financing cash proceeds, equity issuance costs and accrued placement-agent fees across the cash-flow and equity disclosures.