
PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Skye Bioscience's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and stockholders' equity, with detailed notes for periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Total assets decreased by $20.6 million, driven by reduced cash and increased short-term investments, while liabilities rose and equity fell by $24.5 million | Metric | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :-------------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $23,838,244 | $68,415,741 | | Short-term investments | $24,747,039 | — | | Total current assets | $50,582,518 | $70,827,247 | | Total assets | $52,160,911 | $72,763,773 | | Total current liabilities | $8,311,708 | $4,338,887 | | Total liabilities | $8,484,202 | $4,612,049 | | Total stockholders' equity | $43,676,709 | $68,151,724 | - Cash and cash equivalents decreased by $44.58 million from December 31, 2024, to June 30, 2025, while short-term investments of $24.75 million were acquired11 - Total current liabilities increased by approximately $3.97 million, driven by increases in accounts payable and other current liabilities11 Condensed Consolidated Statements of Operations Net loss significantly increased for both three and six months ended June 30, 2025, primarily due to higher research and development expenses for nimacimab | Metric (Unaudited) | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | R&D Expenses | $14,337,753 | $4,078,751 | $21,535,010 | $6,025,201 | | G&A Expenses | $3,906,172 | $4,326,820 | $8,468,477 | $8,532,620 | | Total Op. Expenses | $18,243,925 | $8,405,571 | $30,003,487 | $14,557,821 | | Operating Loss | $(18,243,925) | $(8,405,571) | $(30,003,487) | $(14,557,821) | | Net Loss | $(17,624,872) | $(7,902,816) | $(28,728,191) | $(12,922,347) | | Basic EPS | $(0.44) | $(0.20) | $(0.72) | $(0.39) | - Research and development expenses increased by 252% for the three months and 257% for the six months ended June 30, 2025, compared to the same periods in 2024, primarily due to nimacimab clinical trial and manufacturing costs137481 - Net loss more than doubled for both the three-month and six-month periods year-over-year13 Condensed Consolidated Statements of Cash Flows Net cash and cash equivalents decreased significantly due to increased cash used in operations and substantial outflows for investing activities, including short-term investments | Cash Flow Activity (Unaudited) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating | $(19,931,667) | $(11,801,659) | | Net cash (used in) provided by investing | $(24,663,988) | $1,109,497 | | Net cash provided by financing | $18,158 | $83,556,563 | | Net (decrease) increase in cash | $(44,577,497) | $72,864,401 | | Cash, cash equivalents, end of period | $23,838,244 | $83,201,056 | - Cash used in operating activities increased by approximately $8.13 million, reflecting higher net losses and changes in working capital169598 - Investing activities shifted from a net cash inflow of $1.11 million in 2024 to a net cash outflow of $24.66 million in 2025, largely due to the purchase of short-term investments1699 - Financing activities provided significantly less cash in 2025 ($18,158) compared to 2024 ($83,556,563), as the prior period included substantial proceeds from PIPE financings16100 Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $68.15 million to $43.68 million, primarily due to net loss, partially offset by stock-based compensation | Metric | January 1, 2025 ($) | June 30, 2025 ($) | | :-------------------------- | :-------------- | :------------ | | Total Stockholders' Equity | $68,151,724 | $43,676,709 | | Accumulated Deficit | $(130,949,672) | $(159,677,863)| | Additional Paid-In Capital | $199,070,421 | $203,323,584 | | Metric | January 1, 2024 ($) | June 30, 2024 ($) | | :-------------------------- | :-------------- | :------------ | | Total Stockholders' Equity | $(2,131,818) | $72,809,051 | | Accumulated Deficit | $(104,382,549) | $(117,304,896)| | Additional Paid-In Capital | $102,238,382 | $190,085,879 | - Net loss for the six months ended June 30, 2025, was $28,728,191, contributing to the increase in accumulated deficit17 - Stock-based compensation expense totaled $4,235,018 for the six months ended June 30, 2025, increasing additional paid-in capital1740 Notes to the Unaudited Condensed Consolidated Financial Statements These notes provide essential context for the financial statements, detailing operations, accounting policies, fair value, assets, liabilities, equity, expenses, legal contingencies, and segment reporting 1. Organization, Basis of Presentation and Significant Accounting Policies Skye Bioscience is a clinical-stage biotechnology company developing nimacimab for obesity, with no current revenue, and adopted ASU 2023-09 on income tax disclosures - Skye Bioscience is a clinical-stage biotechnology company developing next-generation molecules to treat obesity, overweight, and related conditions, with nimacimab as its lead candidate1857 - The company has not yet realized revenue from its principal operations and does not expect to for several years1963 - The company adopted ASU 2023-09, 'Improvements to Income Tax Disclosures,' as of January 1, 2025, and is evaluating its impact on the upcoming annual filing25 2. Fair Value Measurement Financial instruments measured at fair value totaled $44.27 million, comprising Level 1 money market funds and U.S. Treasury Obligations as of June 30, 2025 | Asset Category | Valuation Hierarchy | Total Fair Value as of June 30, 2025 ($) | | :------------- | :------------------ | :----------------------------------- | | Money Market Funds | Level 1 | $19,527,439 | | U.S. Treasury Obligations | Level 1 | $24,747,039 | | Total cash equivalents and marketable securities | | $44,274,478 | 3. Prepaid Expenses, Other Current Assets and Liabilities Prepaid expenses and other current liabilities significantly increased due to higher clinical and R&D costs, while other current assets, mainly vendor deposits, decreased | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Prepaid clinical expenses | $710,253 | $13,078 | | Total prepaid expenses | $1,263,812 | $201,962 | | Vendor deposits | $565,831 | $1,997,274 | | Total other current assets | $733,423 | $2,209,544 | | R&D costs (Other current liabilities) | $1,858,242 | $325,415 | | Total other current liabilities | $2,220,063 | $654,201 | - Prepaid clinical expenses saw a substantial increase from $13,078 to $710,25328 - Vendor deposits decreased from $1,997,274 to $565,83128 - Accrued research and development costs within other current liabilities increased from $325,415 to $1,858,24228 4. Warrants As of June 30, 2025, 11,799,016 fully vested warrants were outstanding, including pre-funded warrants from January 2024, with various exercise prices | Source | Exercise Price ($) | Remaining Contractual Term (Years) | Number of Warrants Outstanding | | :-------------------------------------- | :------------- | :--------------------------------- | :----------------------------- | | January 2024 Pre-Funded Warrants Common Stock | $0.001 | Indefinite | 8,677,166 | | August 2023 PIPE Financing Common Stock Warrants | $5.16 | 8.13 | 2,325,537 | | Total warrants outstanding as of June 30, 2025 | | | 11,799,016 | - All warrants outstanding as of June 30, 2025, are fully vested29 5. Stock-Based Compensation The company maintains equity incentive plans, granting stock options and RSUs; stock-based compensation expense was $4.24 million, with $13.71 million unrecognized as of June 30, 2025 - As of June 30, 2025, 324,615 shares were available for future grant under the Amended and Restated Plan, and 142,500 shares under the Inducement Plan3334 | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------- | :----------------------------- | :----------------------------- | | Stock-based compensation expense | $4,235,018 | $4,306,653 | | R&D stock-based compensation | $1,008,606 | $695,719 | | G&A stock-based compensation | $3,226,412 | $3,610,934 | - The total unrecognized compensation cost was $13,710,239 as of June 30, 2025, to be recognized over a weighted average period of 2.71 years40 6. Loss Per Share of Common Stock Basic and diluted net loss per share was $(0.44) for three months and $(0.72) for six months, with anti-dilutive common stock equivalents excluded | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(17,624,872) | $(7,902,816) | $(28,728,191) | $(12,922,347) | | Weighted average common shares outstanding | 39,659,266 | 38,669,330 | 39,655,597 | 33,334,616 | | Basic & Diluted EPS | $(0.44) | $(0.20) | $(0.72) | $(0.39) | - Outstanding stock options (4,523,762), warrants (3,121,850), and unvested restricted stock units (499,363) were anti-dilutive and excluded from diluted EPS calculations for the six months ended June 30, 202541 7. Contingencies A legal proceeding with a former employee was remanded for a new trial in September 2025, with the estimated legal contingency revised to $1.81 million as of June 30, 2025 - The Ninth Circuit Court of Appeals vacated the judgment in the Cunning Lawsuit in October 2024 and remanded the case for a new trial, scheduled for September 202544 - As a result of the appeal, the company recovered a $9,080,202 bond related to the judgment and reversed accrued interest, recognizing a gain of $4,234,7174445 - The estimated legal contingency, including accrued legal expenses, was $1,806,065 as of June 30, 202545 8. Segment Reporting Skye Bioscience operates as a single R&D segment for obesity, with expenses disaggregated to show a significant increase in nimacimab-related clinical development costs - The company operates in one business segment: research and development activities related to developing medicine for obesity and other metabolic diseases47 | R&D Expense Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | nimacimab (External clinical) | $11,720,218 | $1,649,326 | $16,638,640 | $1,805,093 | | Total External clinical development | $11,720,218 | $2,762,783 | $16,640,881 | $3,812,910 | | Personnel related & stock-based comp. | $1,408,024 | $844,863 | $2,745,773 | $1,656,652 | | Other R&D expenses | $1,209,511 | $471,105 | $2,148,356 | $555,639 | | Total R&D expenses | $14,337,753 | $4,078,751 | $21,535,010 | $6,025,201 | - External clinical development expenses for nimacimab increased substantially, reflecting the focus on its Phase 2a clinical trial49 9. Subsequent Events After June 30, 2025, Skye Bioscience granted 160,000 stock options to employees under its Amended and Restated Omnibus Equity Incentive Plan - 160,000 stock options were granted to employees after June 30, 202551 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Skye Bioscience's financial condition and operations, focusing on nimacimab's progress, changes in expenses, other income/expense, liquidity, and future capital needs SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS This cautionary statement advises against undue reliance on forward-looking statements, which involve substantial risks and uncertainties, as actual results may differ materially - The report contains forward-looking statements subject to substantial risks and uncertainties, and actual results may differ materially53 - The company assumes no obligation to update forward-looking statements, except as required by law54 Overview Skye Bioscience is a clinical-stage biotech developing nimacimab for obesity, with Phase 2a trial data expected late Q3/early Q4 2025, supported by promising preclinical results - Skye Bioscience is a clinical-stage biotechnology company developing nimacimab for obesity and overweight, targeting the CB1 receptor57 - The company is conducting a Phase 2a proof-of-concept clinical trial (CBeyond) of nimacimab as a subcutaneous injectable, both as monotherapy and in combination with a GLP-1 receptor agonist58 - Top-line readout from the CBeyond study is anticipated late in the third quarter or early in the fourth quarter of 202558 - Preclinical data showed nimacimab in combination with tirzepatide outperformed either agent alone in weight loss and demonstrated durability as a monotherapy or maintenance therapy post-incretin treatment6061 Financial Overview Skye Bioscience has no revenue, anticipates rising R&D and G&A expenses for nimacimab's development, and revised its legal contingency to $1.81 million after an appeal - The company has not generated any revenue and does not expect to until regulatory approval and commercialization of drug candidates or through collaborative agreements63 - Research and development expenses are expected to increase due to the advancement of nimacimab's clinical program and future drug candidates66 - General and administrative expenses are anticipated to rise due to increased headcount, infrastructure building, and public company compliance costs6769 - The estimated legal contingency for the Cunning Lawsuit was reduced to $1,806,065 as of June 30, 2025, following a successful appeal70 Results of Operations Operating expenses and other income/expense are detailed, showing significant R&D increases for nimacimab, stable G&A, and changes in interest income/expense for the periods ended June 30, 2025 For the three months ended June 30, 2025 and 2024 R&D expenses surged 252% due to nimacimab's clinical and manufacturing costs, G&A decreased 10%, and other (income) expense increased 22% for the three months ended June 30, 2025 | Expense Category | 3 Months Ended June 30, 2025 ($) | 3 Months Ended June 30, 2024 ($) | $ Change ($) | % Change | | :-------------------------- | :--------------------------- | :--------------------------- | :------- | :------- | | Research and development | $14,337,753 | $4,078,751 | $10,259,002 | 252% | | General and administrative | $3,906,172 | $4,326,820 | $(420,648) | (10)% | | Total other (income) expense | $(622,453) | $(510,826) | $(111,627) | 22% | - R&D increase was primarily due to $2.36 million in clinical trial costs, $6.62 million in contract manufacturing for nimacimab, and $0.72 million in discovery R&D74 - G&A decrease was mainly due to reduced legal and professional fees ($854,783) and general business expenses ($371,633), partially offset by increased salaries, stock-based compensation ($563,161), and consulting costs ($142,092)79 - Other (income) expense change was influenced by a $89,363 gain from asset sales, a $450,052 decrease in interest expense, and a $428,147 decrease in interest and other income7680 For the six months ended June 30, 2025 and 2024 R&D expenses increased 257% due to nimacimab's clinical and manufacturing, G&A slightly decreased 1%, and other (income) expense decreased 22% for the six months ended June 30, 2025 | Expense Category | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | $ Change ($) | % Change | | :-------------------------- | :--------------------------- | :--------------------------- | :------- | :------- | | Research and development | $21,535,010 | $6,025,201 | $15,509,809 | 257% | | General and administrative | $8,468,477 | $8,532,620 | $(64,143) | (1)% | | Total other (income) expense | $(1,280,696) | $(1,645,545) | $364,849 | (22)% | - R&D increase was driven by $3.63 million in clinical trial costs, $9.15 million in contract manufacturing for nimacimab, $1.34 million in discovery R&D, and $1.09 million in personnel-related costs83 - G&A decrease was mainly due to reduced legal and professional fees ($862,862) and general business expenses ($358,592), offset by increases in investor relations ($565,089), consulting ($378,083), and salaries ($152,870)84 - Other (income) expense reduction was primarily due to an $886,988 decrease in interest expense and a $1,055,645 decrease in gain on asset sale (one-time event in prior year), partially offset by a $197,458 decrease in interest and other income8591 Liquidity and Capital Resources The company faces significant operating losses and negative cash flows, with $159.7 million accumulated deficit and $23.8 million cash, but believes current funds are sufficient for 12 months, with future capital needs for Phase 2b | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Working capital | $42,270,810 | N/A | | Accumulated deficit | $(159,677,863) | $(130,949,672) | | Stockholders' equity | $43,676,709 | $68,151,724 | | Unrestricted cash & short-term investments | $48,585,283 | $68,415,741 | - The company raised $83,556,563 in net proceeds from PIPE financings in January and March 2024, intended to fund nimacimab's clinical trials through Phase 2a data and prepare for Phase 2b87100 - In Q4 2024, the company recovered $9 million in restricted cash from a litigation bond and collected $2 million from an insurance carrier, reallocating funds to its clinical pipeline90 - Management believes current cash will fund operations for at least 12 months but anticipates needing additional funds for future development, especially for the Phase 2b study92 Off-Balance Sheet Arrangements Skye Bioscience has no material off-balance sheet arrangements impacting its financial condition, results of operations, liquidity, or capital resources - There are no material off-balance sheet arrangements101 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company has no material quantitative or qualitative disclosures regarding market risk, indicating it is not applicable for the reporting period - The company has no applicable quantitative and qualitative disclosures about market risk102 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the fiscal quarter - Disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025104 - No material changes in internal control over financial reporting occurred during the fiscal quarter105 PART II - OTHER INFORMATION Item 1. Legal Proceedings Material legal proceedings, including the Wendy Cunning lawsuit remanded for a new trial, are detailed in Note 7 of the financial statements - Material legal proceedings are detailed in Note 7, 'General Litigation and Disputes,' of the financial statements106 Item 1A. Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K for December 31, 2024 - No material changes to risk factors since the Annual Report on Form 10-K for December 31, 2024107 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities and use of proceeds108 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the reporting period - No defaults upon senior securities109 Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable110 Item 5. Other Information Several officers and directors adopted Rule 10b5-1 trading plans in April 2025 for potential common stock sales, including RSU-related tax liability coverage - CFO Kaitlyn Arsenault adopted a Rule 10b5-1 trading plan on April 24, 2025, for potential sale of up to 45,434 shares and an indeterminate number of shares to cover tax liability from RSUs until December 31, 2027111 - Chairman Paul Grayson adopted a Rule 10b5-1 trading plan on April 25, 2025, for potential sale of up to 86,563 RSU-related shares (including tax coverage) and up to 98,138 common shares until December 31, 2026112 - CSO Chris Twitty and COO Tu Diep also adopted Rule 10b5-1 trading plans on April 25 and April 29, 2025, respectively, primarily to cover tax liabilities upon the vesting of their unvested restricted stock units until December 31, 2026113114 Item 6. Exhibits Exhibits filed with Form 10-Q include organizational documents, officer certifications, and XBRL-formatted financial statements - Exhibits include Amended and Restated Articles of Incorporation and Bylaws, certifications (31.1, 31.2, 32.1, 32.2), and Inline Extensible Business Reporting Language (iXBRL) formatted financial statements116 SIGNATURES The report was signed by CEO Punit Dhillon and CFO Kaitlyn Arsenault on behalf of Skye Bioscience, Inc. on August 7, 2025 - The report was signed by Punit Dhillon, CEO, and Kaitlyn Arsenault, CFO, on August 7, 2025121