Skye Bioscience Inc.(US:SKYE)2025-05-08 20:03PART I - FINANCIAL INFORMATION Financial Statements Skye Bioscience, a clinical-stage biotech, reported an increased net loss in Q1 2025 driven by higher R&D, with total assets decreasing due to cash usage - The company is a clinical-stage biotechnology firm focused on developing molecules to treat obesity and related conditions, and has not yet generated revenue from its principal operations1920 Condensed Consolidated Balance Sheets Total assets decreased to $64.8 million as of March 31, 2025, from $72.8 million at year-end 2024, primarily due to reduced cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $46,421 | $68,416 | | Short-term investments | $12,803 | $0 | | Total current assets | $63,028 | $70,827 | | Total assets | $64,793 | $72,764 | | Liabilities & Equity | | | | Total current liabilities | $5,319 | $4,339 | | Total liabilities | $5,543 | $4,612 | | Total stockholders' equity | $59,250 | $68,152 | Condensed Consolidated Statements of Operations The company reported a net loss of $11.1 million in Q1 2025, up from $5.0 million in Q1 2024, primarily due to increased research and development expenses Condensed Consolidated Statements of Operations (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $7,197 | $1,946 | | General and administrative | $4,562 | $4,206 | | Operating loss | ($11,760) | ($6,152) | | Total other (income) expense, net | ($658) | ($1,135) | | Net loss | ($11,103) | ($5,020) | | Loss per share (basic & diluted) | ($0.28) | ($0.18) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $9.2 million in Q1 2025, with total cash and equivalents decreasing by $22.0 million due to investing activities and no financing Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,185) | $(4,708) | | Net cash (used in) provided by investing activities | $(12,809) | $1,142 | | Net cash provided by financing activities | $0 | $85,653 | | Net (decrease) increase in cash | $(21,994) | $82,086 | Notes to the Unaudited Condensed Consolidated Financial Statements Key disclosures include the 'Wendy Cunning vs Skye Bioscience, Inc.' lawsuit with a $1.9 million contingency, disaggregated R&D expenses highlighting nimacimab, and details on stock incentive plans - The company is party to the 'Wendy Cunning vs Skye Bioscience, Inc.' lawsuit, where a previous judgment was vacated, a new trial is scheduled for September 2025, and the estimated legal contingency is $1,913,003 as of March 31, 2025444546 Disaggregated Research and Development Expenses (Q1 2025 vs Q1 2024, in thousands) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | nimacimab | $5,184,865 | $129,120 | | Personnel related and stock-based compensation | $1,337,958 | $811,789 | | Other research and development expenses | $669,026 | $144,847 | | SBI-100 | $5,408 | $860,694 | | Total R&D Expenses | $7,197,257 | $1,946,450 | - As of March 31, 2025, the company had 1,170,197 shares available for future grant under its Amended and Restated Omnibus Incentive Plan and 230,500 shares available under its 2024 Inducement Equity Incentive Plan3435 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the nimacimab Phase 2a trial, the 270% increase in R&D expenses to $7.2 million, and confirms $59.2 million in liquidity is sufficient for the next 12 months - The company's lead candidate, nimacimab, is in a Phase 2a clinical trial for obesity, with top-line data expected in late Q3 or early Q4 2025, and the trial has been extended to 52 weeks to gather longer-term data5758 - The company believes its current cash will be sufficient to fund projected operations for at least 12 months from the issuance date of the financial statements85 Results of Operations R&D expenses surged by 270% to $7.2 million in Q1 2025 due to nimacimab, while G&A expenses increased by 8%, and other income decreased due to non-recurring gains Change in Research & Development Expenses (Q1 2025 vs Q1 2024, in thousands) | Expense Category | Change | Reason | | :--- | :--- | :--- | | Clinical trial costs | +$1,266,302 | Increased site and patient costs for Nimacimab Phase 2a study | | Contract manufacturing costs | +$2,532,130 | Drug substance and product costs for nimacimab | | Discovery research and development | +$623,020 | Increased work on nimacimab's mechanism of action | - General and administrative expenses increased by $356,505 (8%) YoY, primarily due to a $373,571 increase in investor relations, marketing, and communications expenses7579 - Total other income decreased by $476,476 YoY, mainly because a $1,145,141 gain on an asset sale in Q1 2024 did not recur, partially offset by a $435,484 reduction in interest expense and a $191,500 increase in interest income in Q1 20257677 Liquidity and Capital Resources The company held $59.2 million in cash and equivalents as of March 31, 2025, asserting sufficient liquidity for at least 12 months, bolstered by $83.6 million from 2024 PIPE financings - The company had unrestricted cash, cash equivalents, and short-term investments of $59.2 million as of March 31, 2025, compared to $68.4 million as of December 31, 202480 - In January and March 2024, the company raised combined net proceeds of $83.6 million from two private placement (PIPE) financings81 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,185) | $(4,708) | | Net cash (used in) provided by investing activities | $(12,809) | $1,142 | | Net cash provided by financing activities | $0 | $85,653 | Quantitative and Qualitative Disclosures about Market Risk This section is stated as 'Not applicable,' typical for a smaller reporting company with limited market risk exposure - The report states this item is 'Not applicable'96 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 202598 - No changes in internal control over financial reporting occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control99 PART II - OTHER INFORMATION Legal Proceedings This section refers to Note 7 of the financial statements for details on material legal proceedings, primarily the 'Wendy Cunning vs Skye Bioscience, Inc.' lawsuit - For a description of material legal proceedings, the report refers to Note 7, 'General Litigation and Disputes' in the financial statements101 Risk Factors No material changes to previously disclosed risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have been reported - There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024102 Other Information Director Deborah Charych and CEO Punit Dhillon adopted Rule 10b5-1 trading plans in February and March 2025, respectively, for potential future stock sales - On February 12, 2025, Director Deborah Charych adopted a Rule 10b5-1 trading plan for the potential sale of up to 58,917 shares106 - On March 28, 2025, CEO Punit Dhillon adopted a Rule 10b5-1 trading plan covering the potential sale of shares from RSUs and his personal holdings through 2025 and 2026107 Exhibits This section lists exhibits filed with the report, including CEO and CFO certifications and financial statements in Inline XBRL format - The exhibits filed with the report include certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Rules 13a-14, 15d-14, and Section 906 of Sarbanes-Oxley) and iXBRL data files108