What changed in this filing

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Item 1. Business

2024-03-22 compared with 2023-03-31 · 351 added, 224 removed, 181 unchanged (76% of the section changed)

About Skye Bioscience, Inc.

We were incorporated in the State of Nevada on March 16, 2011.

We are a clinical stage pharmaceutical company focused on the discovery, development and commercialization of a novel class of cannabinoid derivatives to modulate the endocannabinoid system, which has been shown to play a vital role in overall human health and, notably, in multiple ocular indications.

We are developing novel cannabinoid derivatives through our own directed research efforts and multiple license agreements.

We have retained Novotech as our contract research organization ("CRO") in Australia and commenced our Phase 1 trial in December 2022.

We have also filed our IND for SBI-100 OE in the United States in anticipation of the start of our Phase 2 clinical trial in 2023, which we expect to commence in mid 2023.

Effective January 19, 2021, we changed our name from Emerald Bioscience, Inc.

to Skye Bioscience, Inc.

Our common stock is quoted on the OTCQB, under the symbol "SKYE".

Previously, it traded under the symbol EMBI.

In August 2019, we formed a new subsidiary in Australia, SKYE Bioscience Australia, in order to qualify for the Australian government’s research and development tax credit for research and development dollars spent in Australia.

The primary purpose of SKYE Bioscience Australia is to conduct clinical trials for our drug product candidates.

SKYE Bioscience Australia is currently conducting our Phase 1 clinical study in Australia.

We expect to report final data from this study in the fourth quarter of 2023.

As described in more detail in the section below titled “ Liquidity and Going Concern ”, without additional funding during the second quarter of 2023, management believes that the Company will not have enough funds to meet its obligations and continue pre-clinical and clinical studies beyond the one year date the consolidated financial statements are issued.

If we do not receive additional funding during of the second quarter of 2023, we likely cannot continue operations.

EHT Acquisition

On May 11, 2022, we entered into an Arrangement Agreement (as amended, the “Arrangement Agreement”) with EHT, pursuant to which we agreed to acquire all of the issued and outstanding common shares of EHT pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Acquisition”).

The Acquisition was consummated on November 10, 2022.

Under the terms of the Arrangement Agreement and the Plan of Arrangement, on November 10, 2022, each share of EHT common stock (“EHT Shares”) outstanding immediately prior to the effective time of the Acquisition (the “Effective Time”) was transferred to the Company in exchange for 1.95 shares (the “Exchange Ratio”) of Company common stock.

The cash and assets of EHT and its subsidiaries acquired in the Acquisition are being used to fund our Phase 1 and Phase 2 clinical trials.

EHT and its subsidiaries are currently in the final stages of its realization process to wind down all prior operations and liquidate substantially all of its remaining assets.

As of the date of this Annual Report on Form 10K, we have divested both of EHT's former operating subsidiaries, VDL and Emerald Health Therapeutics Canada, Inc., and are in the process of resolving EHT's legacy tax matters with the Canadian tax authorities.

In February 2023, the closing payment from the sale of VDL provided the Company with $5,547,000.

This Acquisition has been a pivotal financing event for our business, allowing us to extend our cash runway into the second quarter of 2023 and will provide us with future funding as we collect the remaining receivables.

In addition, EHT has a vacant lab facility which we are currently evaluating to determine whether it is practical to bring certain aspects of our research and development activities in house or to divest to generate additional corporate funding.

Table of Cont ents

Our Product Candidates and Significant Contracts.

UM 5050 and UM 8930 License Agreements

We have license agreements with University of Mississippi ("UM") for UM 5050 and UM 8930 for "all fields of use" (each, a "License Agreement" and, collectively, the “License Agreements”).

Pursuant to the License Agreements, UM granted us an exclusive license including, with the prior written consent of UM, the right to sublicense the intellectual property related to UM 5050 (referred to by Skye as SBI-100) and UM 8930 (referred to by Skye as SBI-200) for all fields of use.

All fields of use means no restrictions on use of the underlying inventions, including developing UM 5050 and UM 8930 to treat any disease through any form of delivery under the License Agreements.

The exclusive license for our lead molecule, SBI-100, a cannabinoid receptor type 1 ("CBR1") agonist, under the License Agreement for UM 5050 is expected to allow us to explore related uses for the active moiety of SBI-100.

Independent in vitro and in vivo studies have demonstrated the potential use of SBI-100 in a variety of potential indications based on the ability of CBR1 agonists to act as an anti-inflammatory, anti-fibrotic and/or inhibitor of neovascularization.

The Company has generated data related to these effects using an ex vivo human tissue model of the eye.

While earlier third party research validated the utility of a cannabinoid to provide therapeutic utility against diseases such as glaucoma, available methods of administration were burdened with their own side effects and limitations.

Notably, it is difficult to topically deliver a natural cannabinoid molecule into the eye due to its lipophilic nature.

SBI-100 is a natural cannabinoid that has been chemically modified to reduce the lipophilic nature of the original molecule and enhance the ability to administer the molecule on and through the eye.

It is designed such that after it is introduced into the body, enzymes convert it back to its original active ingredient and enable its beneficial mechanisms of action to be unlocked.

The Company's development team is also considering various routes of administration for SBI-100 into the body for different potential disease applications.

The exclusive license of SBI-200, a novel cannabinoid receptor ("CBR") modulator, under the License Agreement for UM 8930, allows us to explore uses in ophthalmic disorders as well as expanded research and development into organ systems outside of ophthalmology.

Potential therapeutic areas beyond ophthalmic indications for SBI-200 may include the central nervous system, gastrointestinal tract, endocrine/metabolic system, reproductive system, or as yet unrecognized opportunities.

We have developed strategic collaborations to identify and advance these applications.

Our lead product, SBI-100 OE, is initially being developed to treat glaucoma and ocular hypertension.

SBI-100 OE is comprised of the molecule licensed from UM, SBI-100, plus a proprietary nanoemulsion formulation.

The first-in-human Phase 1 trial of SBI-100 OE is currently being conducted in healthy volunteers in Australia to evaluate this drug candidate's safety, tolerability, pharmacokinetics and pharmacodynamics.

We are eligible under the AusIndustry research and development tax incentive program to obtain a cash incentive from the Australian Taxation Office.

The tax incentive is available to us based on specific criteria with which we must comply and is based on our eligible research and development spend in Australia.

The Company is currently eligible for a 48.5% refundable tax offset as long as it has aggregate turnover of less than $20 million per annum.

SBI-100 OE targets the CB1 receptor, which plays a key role in managing intraocular pressure associated with glaucoma.

Glaucoma is an ocular neuropathy associated with the initiation of programmed cell death, known as apoptosis, of retinal ganglion cells ("RGCs") of the optic nerve, resulting in progressive and irreversible loss of vision.

Intraocular pressure ("IOP") has been identified as an important risk factor in the pathogenesis of this disease.

Elevated IOP can lead to damage of RGC axons through vascular ischemia, by compromising blood flow to the cells, and physical crush injury as the elevated ocular pressure compresses these delicate cells.

Cannabinoid receptors are highly concentrated in the eye, especially in the anterior compartment that helps regulate IOP, and the posterior compartment in the area of the retina and optic nerve.

Stimulation of CBR1 has been previously shown to lower IOP in both animal and human studies.

We are a clinical stage biopharmaceutical company with a mission to pioneer the development of new medicines that unlock the pharmaceutical potential of the endocannabinoid system ("ECS").

Our clinical assets focus on the modulation of cannabinoid receptor 1 ("CB1") to provide novel treatments and alternatives for diseases caused by metabolic disorders, inflammation, fibrosis and neurodegeneration, such as obesity and glaucoma.

Our Phase 2 clinical candidates include nimacimab, a negative allosteric modulating antibody that inhibits peripheral CB1 receptors, currently being developed for the treatment of obesity and SBI-100 Ophthalmic Emulsion ("SBI-100 OE"), a CB1 agonist (activator), currently being developed for the treatment of glaucoma and ocular hypertension.

Both of these differentiated drug candidates are focused on distinct opportunities with large unmet needs:

1) Obesity - where a patients now need additional treatments that have the ability to preserve muscle tissue and improve metabolic dysfunction either as new monotherapies or in combination which existing treatments, and 2) Glaucoma - where novel drugs with distinct mechanisms are needed, especially those that are safe, well-tolerated and have neuroprotective potential.

We have filed and successfully opened an Investigational New Drug ("IND") application with the U.S.

Food and Drug Administration ("FDA") for nimacimab in obesity, and we plan to launch a Phase 2 clinical trial to evaluate nimacimab for the treatment of obesity as monotherapy compared against placebo, as well as evaluate the combination of nimacimab and a GLP-1 agonist in Q3 2024, with final data in late 2025.

We are also continuing clinical development of SBI-100 OE for glaucoma and ocular hypertension, with the first data read out from our recently completed Phase 2a trial anticipated in Q2 2024.

The Endocannabinoid System

Peripheral CB1 Inhibitor

The exploration of the CB1 pathway as a therapeutic target has seen a resurgence of scientific interest, particularly for its role in modulating key physiological functions such as appetite regulation, weight loss and related metabolic processes.

Interest in CB1 inhibition has grown in part due to the unprecedented efficacy and commercial success but also the limitations of glucagon-like peptide-1 receptor (GLP-1) agonists for the treatment of obesity due to its distinct mechanisms and poor tolerability.

While Novo Nordisk's Wegovy ® (semaglutide) once-weekly GLP-1 agonist injection for obesity had sales grow 442% to $4.7 billion in 2023, at the same time Novo Nordisk purchased Inversago, a clinical-stage company developing a peripherally-restricted CB1 inverse agonist therapy for weight loss.

We believe this is in part because CB1 inhibition holds significant potential in obesity, and other metabolic diseases, as either a stand-alone drug or in combination with Novo Nordisk's GLP-1 agonist therapy, Wegovy ® .

The history of CB1 inhibition for the treatment of weight loss in obesity is long and well documented.

It started with the clinical validation of an approved drug, Accomplia ® , along with it's ultimate demise due to serious side effects.

This was followed by a period of deep research into better understanding the mechanisms of weight loss, as well as, the corresponding side effects from CB1 inhibition - ultimately leading to a new class of "peripherally restricted" CB1 inhibitors.

As a result, we now understand that inhibiting the CB1 receptor in peripheral tissues has the potential to not only cause weight loss, but may also, provide additional benefits such as improving insulin and leptin sensitivity, while specifically targeting fat loss and preserving lean muscle.

In 2006, Accomplia ® (rimonabant) was approved for the treatment of obesity by the European Medicines Agency.

Rimonabant was a CB1 inverse agonist that inhibited signaling both in the central nervous system and peripherally.

Rimonabant consistently induced weight loss of 4-6 kg over 6-12 months vs.

placebo, with accompanying improvements in metabolic control and hyperlipidemia (Van Gaal et al.

Lancet, 2016, Astrup et al., Lancet, 2007).

Subsequent meta-analyses showed that rimonabant increased risk of serious psychiatric adverse events such as anxiety, depression and suicidal ideation.

It is believed that rimonabant's accumulation in the brain is the primary reason for the increased risk of serious psychiatric events.

However, an increasing body of research suggests that the weight loss benefits of rimonabant may be achieved by targeting CB1 inhibition solely in the periphery and not in the brain, thereby avoiding risk of psychiatric adverse events.

Although nimacimab is not in direct competition with GLP-1 agonists, a comparative analysis of rimonabant and semaglutide highlights significant differences in their gastrointestinal (GI) adverse event (AE) profiles.

By evaluating rimonabant's GI tolerability and addressing the potential reduced risk of neuropsychiatric AEs with nimacimab—a peripherally acting antibody—nimacimab may emerge as an important next generation mechanisms beyond GLP-1 agonists for healthier, more sustainable weight loss and precision obesity including preserving muscle mass.

(Van Gaal et al., Diabetes Care 2008 and Wilding et al., New England J Medicine 2021).

Several mouse model studies support the hypothesis that selectively targeting CB1 inhibition exclusively in the periphery results in weight loss as well as other potential benefits.

For example, Jenrin Discovery developed JD5037 a CB1 antagonist from ibipinabant with limited brain penetrance.

Preclinical studies in the diet-induced obese mouse demonstrated that treatment with 3mg/kg daily of JD5037 over a 28-day period reduced body weight to normal levels.

(Tam et al., Cell Metabolism 2012) Mice treated with JD5037 reduced body fat without loss of lean muscle mass.

Treated mice experienced restoration of leptin sensitivity by decreasing leptin excretion by fat tissue, which resulted in increased fat loss.

When these data are taken together with data from rimonabant, we can conclude that peripheral inhibition of CB1 is sufficient to induce weight loss, while preserving lean muscle mass and avoiding risks associated with inhibiting CB1 in the brain and central nervous system.

Additional preclinical evidence also suggests that targeting both GLP-1 and inhibiting CB1 in the periphery with JD-5037 results in restoration of insulin sensitivity that is not seen with GLP-1 agonist therapy alone.

(Liu et al., ACS Pharmacol.

2021 and Tam et al., Molecular Metabolism 2017)

We are currently developing nimacimab, a patented peripherally-acting negative allosteric modulating CB1 inhibitor, initially for treatment of obesity.

As a monoclonal antibody, nimacimab may offer a wider therapeutic window compared to competitive small-molecule peripheral CB1 inhibitors.

Animal data generated positive safety data over 26 weeks and showed that, following dosing, nimacimab primarily remained in peripheral tissue outside the brain/central nervous system ("CNS") and the product candidate had a positive PK/PD supportive of once-monthly dosing.

SBI-100 Ophthalmic Emulsion:

CB1 Agonist (Activator)

We are also developing a CB1 agonist for treatment of glaucoma and ocular hypertension.

Approximately 7 million people in the United States and 60 million people worldwide suffer from glaucoma and ocular hypertension ("OH"), which is caused by slow drainage of the eye and leads to increases in intraocular pressure ("IOP").

Ultimately, increased IOP is believed to be a main cause of optic nerve damage in glaucoma.

Currently, only IOP lowering has been proven to be a modifiable risk factor for glaucoma onset and progression, and thus is the only acceptable endpoint for marketing approval by the FDA (De Moraes et al., Sci.

2023 and Leske et al., Arch Ophthalmol 2003).

We believe that the unmet need for treatments in glaucoma is high.

Approximately 40% of patients fail first line therapy and approximately 50% of patients require more than one therapy.

SBI-100 OE is a CB1 agonist (activator) and is a patented prodrug of tetrahydrocannabinol ("THC") focused on lowering IOP related to glaucoma and ocular hypertension.

Ophthalmology opinion leaders have described the unmet need for a new alternate class of medicine to lower intraocular pressure and ideally provide protection against detrimental neurodegenerative effects on the optic nerve.

Third party research has demonstrated the utility of THC to lower intraocular pressure and also indicated its neuroprotective capabilities.

In October 2023, Skye announced Phase 1 data indicating this differentiated eyedrop was safe and well tolerated, with a low rate of hyperaemia (red eyes) and no signs of intoxication from exposure to THC.

Encouraging signs of reduction in IOP were also observed in the subset of healthy volunteers who had an elevated baseline IOP, indicating the potential utility of SBI-100 OE in reducing IOP in patients with glaucoma or ocular hypertension.

We launched a Phase 2a clinical trial of SBI-100 OE in Q4 2023.

Enrollment was completed in Q1 2024, with data expected in Q2 2024.

Our aim is to be a leader in research and product development focused on the EC system.

Our goal is to develop first-in-class products to treat significant unmet medical need in global markets.

Our operating strategy emphasizes:

Advancing Our Differentiated CB1 Inhibitor, Nimacimab, with a Focus on Obesity as a Stand Alone and Adjunct Therapy to GLP-1 by:

• Continuing to build on Phase 1 clinical data supporting evidence demonstrating safety and evidence of weight loss through restoring leptin sensitivity and enhancing fat metabolism

• Developing clinical data in Phase 2 supporting our hypothesis that nimacimab may cause weight loss while preserving muscle mass, which is not possible with current GLP-1 and GIP (glucose-dependent insulinotropic peptide) agonist therapies where reduction of muscle mass is a known side effect.

• Showing through clinical data the potential for nimacimab to preserve muscle mass, and induce further reduction in weight loss when used in conjunction with GLP-1 and GIP agonist therapies

• Exploring strategic collaborations for further development and deployment of nimacimab by expanding the clinical trial pipeline

Advance Our First of Kind Eye Drop Formulation of CB1 Agonist SBI-100 OE as a New Treatment for Ocular Hypertension and Glaucoma by:

• Continuing our Phase 2a proof-of-concept study to develop evidence supporting our hypothesis that SBI-100 OE will lower IOP in patients with ocular hypertension and glaucoma as it did in healthy patients during our Phase 1 clinical trial

• Initiating a Phase 2b study evaluating SBI-100 OE against a current standard of care

By adhering to this strategy, Skye aims to create medicines that significantly improve the lives of patients around the world.

Our focus on the ECS and CB1 modulation reflects our commitment to developing innovative treatments for chronic diseases with large unmet needs characterized by neuropathic, inflammatory, and metabolic processes.

Our Product Candidates

Peripheral CB1 Inhibitor

Unmet Need & Market Opportunity

Global obesity rates have been rising dramatically, affecting more than one billion people worldwide (approximately 650 million adults).

For example, approximately 42.4% of adults living in the United States are obese.

This translates to more than 112.5 million American adults with a BMI of >30kg/m 2 , although it is likely that current rates and patient numbers are higher given obesity prevalence has increased 30.5% since 2000.

Obesity is a complex disease characterized by excess and chronic inflammation of adipose tissues, and it results from a chronic energy surplus in which the body’s energy intake exceeds its energy expenditure.

Other stressors and environmental factors contribute to this chronic imbalance.

Today, obesity is the fifth-leading risk factor cited by the World Health Organization ("WHO") for contributing as a primary cause of death globally.

Current estimates by the World Obesity Atlas suggest that over half the global population will be overweight or obese by 2035, compared to 38% in 2020.

Early-generation therapies for obesity offered only modest help in weight reduction, with some drugs being removed from the market due to safety concerns.

More recently, a new class of drugs have proven very effective at achieving weight loss.

These incretin mimetics, including GLP-1 agonists such as semaglutide and GLP-1/GIP combinations such as tirzepatide, have changed the paradigm for anti-obesity treatments.

Products derived from these compounds suppress appetite and induce satiety, reduce gastric emptying, and thus reduce calorie intake, achieving weight-loss of up to 20% within one year.

However, these drugs come with some potentially significant gastrointestinal side effects that may arise, including diarrhea, nausea, abdominal pain and bloating, and in some cases patients may suffer from a condition known as gastroparesis, or paralyzed stomach.

Additional side effects, although infrequent, include instances of acute pancreatitis, gallbladder disease, hypoglycemia, acute kidney injury and diabetic retinopathy (in diabetics).

Beyond these potential side effects, it has been observed that muscle mass loss accounts for up to 40% of the weight lost in patients using these drugs, which is higher than the typical loss of approximately 25% muscle mass loss in normal weight loss settings.

As a result of these side effects many patients are intolerant to these incretin-mimetic drugs.

In most cases, even when therapy is tolerated, patients are unable to get to a healthy weight.

When taken off therapy, patients can gain a majority of their weight back within the first year.

Nevertheless, the market for this class of drugs is projected to grow to $20 billion in sales by 2030.

Despite this unprecedented efficacy and commercial success, we believe there remains room for improvement over these new therapies.

Potential of the Body's Endocannabinoid System for Pharmaceutical Drug Development in the Treatment of Obesity

The cloning of CB1, along with the discovery of its endogenous ligands, the endocannabinoids ("ECs"), anandamide ("AEA") and arachidonoylglycerol ("2- AG"), has illuminated some of the biological intricacies and mechanisms involved in fat storage and development of obesity.

ECs, CB1, and closely related cannabinoid type-2 receptors constitute the endocannabinoid system ("ECS").

The ECS primarily functions to regulate energy storage and balance within the body, facilitated by CB1's activity in the brain and peripheral tissues.

The ECS helps maintain many physiological processes by enabling different cellular functions , all with a role in achieving a global homeostasis despite fluctuations in the external environment.

ECs are produced in the body, where their synthesis and degradation is regulated by different enzymes.

These endocannabinoids act as agonists that can bind to and signal via specific endocannabinoid receptors expressed on various cell types and tissues.

The CB1 receptor is one of the most abundant ECS receptors in the body.

It is predominantly found in the CNS, where its role is associated with motor control, cognition, and emotional processing, and including modulation of processes of the eye.

CB1 receptors are also found in peripheral tissues, or outside of the CNS, such as the liver, kidney, adipose tissue (fat cells), pancreas, and the gastrointestinal tract.

One notable role of CB1 receptors in peripheral tissues is their involvement in metabolic regulation.

In adipose tissue, activation of CB1 receptors has been linked to the promotion of fat storage, suggesting their role in the balance of energy storage and utilization.

In the kidney, CB1 signaling helps modulate blood flow vital for the filtration of waste products and excess fluids, a process essential for maintaining proper electrolyte balance and blood pressure.

CB1 in the liver is involved in the regulation of lipid metabolism and glucose homeostasis.

Activation of CB1 receptors in the gastrointestinal tract can modulate the release of neurotransmitters and hormones that influence appetite, gastric motility, and nutrient absorption.

The distribution and function of the CB1 axis provides a strong rationale to target this critical physiological system as a therapeutic to treat different pathological states.

Moreover, dysregulation of the CB1 axis in peripheral tissues has been associated with metabolic disorders such as obesity and kidney disease.

Operating as a G-protein coupled receptor, CB1 typically associates with inhibitory Gi/o proteins to reduce cellular activity by inhibiting adenylyl cyclase and cAMP activity.

Additionally, CB1 interaction with ß-arrestin can initiate a distinct signaling cascade, the full implications of which are not yet completely understood.

This ß-arrestin pathway is known to affect receptor sensitivity and expression levels.

Recent research highlights that inhibiting CB1 outside the brain can influence leptin sensitivity and adipocyte signaling, directly impacting fat cell physiology.

Activation of CB1 promotes fat accumulation and disrupts mitochondrial function in obesity models, whereas inhibiting CB1 enhances mitochondrial biogenesis.

This metabolic adjustment results in weight loss primarily through heightened energy expenditure, increased lipolysis, and fatty acid oxidation processes, particularly in brown adipose tissue, which serves as an energy source, contrasting white adipose tissue's role in long-term fat storage.

It has been previously demonstrated that inhibiting the CB1 receptor can significantly reduce weight in obese patients.

In 2006, Sanofi developed a CB1 inverse agonist called rimonabant, which demonstrated 8-10% weight loss after one year.

Despite being approved by the European Medicines Agency, the drug was soon taken off the market because it was shown to result in a higher risk of adverse psychiatric side effects.

As a result, rimonabant was taken off the market in Europe and Sanofi, along with other large pharmaceutical companies like Merck and Pfizer, stopped all development of CB1 inhibitors.

Since the demise of rimonabant, a significant amount of research was conducted to better understand the CB1 blockade and why drugs like rimonabant failed.

Ultimately it was determined that rimonabant readily entered the brain, resulting in significant psychiatric side effects.

However, it was also discovered that blockade of CB1 receptors outside of the brain (i.e.

peripheral CB1 receptors), could also result in meaningful weight loss and also improvement in other metabolic parameters.

These studies have led to the development of "peripherally restricted" CB1 inhibitors that have significantly less penetration into the brain, resulting in a potentially safer drug while maintaining potentially similar weight loss characteristics.

Moreover, researchers have shown that peripheral blockade of the CB1 receptors can also result in weight loss with less muscle mass loss (i.e.

muscle wasting), while also improving metabolic parameters important in changing the course of the disease in obesity, such as improving insulin sensitivity.

We believe incretin mimetics, like GLP-1 agonists, have established themselves as a potential foundation for the therapeutic treatment of weight loss.

However, with their potentially challenging safety profile and marked incidence of muscle wasting associated with weight loss, we believe it is imperative to develop new drugs that can be complimentary to GLP-1 agonists, such as in combination with, as a follow-on to standard-of-care GLP-1 therapies, or even as an alternative therapy for obese patients who can not tolerate the side effects of GLP-1 agonists.

Peripheral CB1 inhibition represents an important new mechanism with potential to help reduce these challenges and create improved therapeutic outcomes.

In 2023, Skye acquired BRB along with its lead asset, nimacimab, a humanized IgG4 negative allosteric modulating (NAM) antibody that specifically binds to CB1 receptor and does not cross-react with other GPCRs including CB2.

CB1 binding characteristics including specificity and affinity have been confirmed with both ELISA and flow cytometry-based assays.

Assessing functional inhibition including demonstration of noncompetitive binding CB1 has been confirmed with both b-arrestin-based and GPCR-based endpoints.

This functional and specific CB1 inhibiting antibody has also been characterized in multiple biodistribution assays, which collectively demonstrated a high degree of peripheral restriction with minimal detection in the CNS and brain in early time points as well as no accumulation in the brain over 28 days, despite nimacimab's 18-20 day half-life.

This lack of blood-brain barrier (BBB) penetration, while not uncommon for a larger biologic such as an antibody therapeutic, is an important feature that helps underpin nimacimab's excellent safety profile.

While different strategies have been developed to limit CB1 signaling, nimacimab's negative allosteric approach is differentiated relative to an inverse agonist inhibitor in a few notable ways.

A fundamental functional difference relates to the ability of nimacimab to inhibit in a non-competitive fashion.

Since nimacimab limits the receptor activity by binding away (allosterically) from the agonist (endocannabinoid) receptor binding pocket, it is able to inhibit the CB1 signal independently of receptor engagement.

In contrast, an inverse agonist competes with the endocannabinoid for receptor binding and thus inhibition of CB1 signaling.

While this distinction may not be as impactful in healthier patients with minimal pathology, this mechanistic distinction becomes more relevant in patients with notable disease progression where the CB1 axis (both receptor but importantly endocannabinoid density) can be significantly overactive in local tissues, enabling competition with an inverse agonist for receptor occupancy.

This difference can be exaggerated when the bioavailability of an inverse agonist is limited, which highlights a second key distinction between nimacimab, an antibody therapeutic, and inverse agonists, which are currently all small molecule therapeutics.

Small molecule-based CB1 inverse agonists have been modified to discourage distribution in the CNS and brain by increasing the polarity of surface residues, which also impacts membranous trafficking and bioavailability.

While this altered small molecule yields a notable improvement in CNS distribution relative to non-biased small molecules such as rimonabant, its presence and significant CB1 occupancy in the brain has still been noted in a chronic preclinical setting.

Coupled with an impact on bioavailability, this may limit the therapeutic index and thus its relative density in local tissues.

In contrast, nimacimab has an excellent clinical safety profile with a large NOAEL (no observed adverse effect level) and an 18-20 day half-life which collectively supports a favorable pharmacologic profile capable of safely inhibiting CB1 signaling in relevant disease settings.

Nonclinical Data

Nonclinical studies were designed to characterize various pharmacodynamic aspects of nimacimab, including specificity and in vitro affinity binding, functional cell-based inhibition, as well as other mechanistic details.

Key findings from these studies demonstrated that nimacimab is selective and does not bind to other GPCR targets while binding with low nM affinity to human CB1.

The antibody was able to block CB1 activation by the natural endocannabinoid ligands AEA and 2-AG and demonstrated dose-dependent antagonist activity measured by both cAMP and b-arrestin signaling pathways.

Pre-treatment with nimacimab blocked CB1 agonist-induced CB1 internalization and nimacimab did not induce internalization in the absence of agonist.

Additionally, nimacimab had no effect on antibody-dependent cellular cytotoxicity (ADCC) or complement-dependent cytotoxicity (CDC), suggesting that nimacimab's mechanism of action is focused on blocking CB1 signaling and not any direct immune-mediated effects.

Lastly, antibody blockade of CB1 on matured adipocytes from obese subjects significantly increased adiponectin production compared to vehicle control.

These findings are of importance as adiponectin, an adipokine secreted by adipocytes, play a critical role in regulating glucose levels, lipid metabolism, and insulin sensitivity, which collectively support positive metabolomic regulation.

Clinical Data

In a Phase 1b entitled "Safety, Tolerability and Pharmacokinetics of Nimacimab after Repeat Dosing in Subjects with Non-Alcoholic Fatty Liver Disease (NAFLD)," the purpose was to evaluate the safety and tolerabilty of multiple doses of nimacimab after four weeks of dosing in subjects with NAFLD.

Secondary objectives included determination of pharmacokinetics of nimacimab for multiple doses, and to determine levels of anti-drug antibodies (ADA) after dosing with nimacimab.

In Part A of this study, 24 healthy volunteers were randomized to receive a single dose of either placebo or single ascending doses of nimacimab (0.6, 1.2 or 2.5 mg/kg).

In Part B, 82 patients with pre-diabetes or diabetes and NAFLD were randomized to receive either placebo or multiple escalating doses of nimacimab (0.6, 1.2 or 2.5 mg/kg) once a week for four weeks.

There were no deaths, serious adverse events (SAEs) or treatment-emergent adverse events (TEAEs) that lead to discontinuation.

All TEAEs were graded as mild to moderate in intensity except for 1 severe TEAE (dizziness) in the nimacimab 0.6 mg/kg dose group determined to have not been related to study drug.

The majority of TEAEs were not related to study drug and there was no apparent relationship between the dose level and the type, severity, or incidence of the TEAEs.

For all subjects at all doses, concentrations of nimacimab were quantifiable in serum by 0.5 hours after the first dose and remained quantifiable in most subjects through the last time point (Day 67).

Exposure to nimacimab as measured by AUC and C max increased with increasing doses of nimacimab.

At all dose levels, median T max ranged from 0.5 to 2 hours and mean t 1/2 ranged from 18 to 22 days.

Immunogenicity was assessed in all subjects throughout the study.

Only two subjects had consistently elevated titers over multiple time points of ADA.

These data suggest that nimacimab has overall low immunogenicity.

Decreases in mean alanine transaminase (ALT) and aspartate aminotransferase (AST) were observed during the study in the active treatment groups, but not in the placebo group.

Numeric decreases in ELF score and statistically significant reduction in hyaluronic acid (HA) was observed in the 1.2 mg/kg dose group compared to placebo (p=0.02).

Assessment of serum lipids indicated a dose-dependent trend towards reduction of low-density lipoprotein cholesterol (LDL-c) starting from Day 29;

on Day 67 there was a mean 8.9 mg/dL decrease in LDL-c in the 2.5 mg/kg dose group compared with a mean 8.3 mg/dL increase in the placebo group (p=0.0073).

No effect was observed in total cholesterol, high-density lipoprotein cholesterol (HDL-c), and triglycerides.

No significant treatment effect was observed on liver fat percentage, DNL, inflammatory biomarkers and OGTT test.

Development Plan

IND-enabling studies of nimacimab in non-human primates demonstrated a strong safety profile with a NOAEL of 75 mg/kg.

Our Phase 2 study in obesity is designed to evaluate nimacimab's weight loss potential either as a single agent or in combination with a GLP-1 agonist like semaglutide.

We believe the complementary mechanism of action of CB1 inhibition with nimacimab in combination with a GLP-1 agonist has the potential to provide more meaningful weight loss, and potentially more durable weight loss, than a GLP-1 agonist alone.

Our Phase 2 clinical trial design will treat non-diabetic individuals with obesity (BMI≥30) or those overweight (BMI≥27) with at least one weight-related health issue.

Participants will be treated with either nimacaimb, a GLP-1 agonist such as semaglutide, a combination of nimacimab plus a GLP-1 agonist, or placebo.

This 26-week study will be followed by a 12-week observation period.

The main goal is to measure the percentage of weight loss by week 26, with secondary goals assessing changes in waist size, body composition, fasting triglyceride levels, cholesterol, and A1c.

The study will help us evaluate the effectiveness of nimacimab alone versus placebo, as well as compare the difference between nimcacimab and semaglutide and the potential enhanced effects of their combination.

A key focus is the impact on body composition across different groups, especially since nimacimab is expected to better preserve muscle mass by promoting fat browning, a benefit observed in preclinical studies where CB1 inhibition led to significant weight reduction without muscle loss over 28 days.

We plan to finalize the trial design and start the Phase 2 study in approximately mid-2024.

SBI-100 Ophthalmic Emulsion:

CB1 Agonist (Activator)

Unmet Need & Market Opportunity

Glaucoma is characterized by progressive ocular neuropathy associated with the initiation of apoptosis of retinal ganglion cells ("RGCs") in the optic nerve, which can progress and cause irreversible loss of vision.

While the pathology of glaucoma is in the back of the eye, a key driver of this disease is often found in the front of the eye.

Specifically, elevated intraocular pressure ("IOP") resulting from dysregulated outflow, and to a lesser extent production of aqueous humor ("AH") in the anterior/posterior chambers in the front of the eye, readily promotes damage to RGC axons through vascular ischemia and physical crush injury as the elevated ocular pressure compresses these critical cells.

IOP is currently the only modifiable risk factor and lowering IOP results in reduced risk of progression of damage to the optic nerve.

Moreover, IOP has been identified as an important risk factor in the pathogenesis of this disease.

To reduce IOP, the current classes of glaucoma therapeutics target pathways that shift the balance of production or outflow of AH.

This therapeutic landscape is made up of five drug classes focused on lowering IOP toward a target level whereby the rate of disease progression will be slowed sufficiently to avoid functional impairment from the disease.

Prostaglandin analogues and β-blockers are the first-line therapies and the most commonly used medications for the management of glaucoma.

There are other therapeutic agents less commonly used to reduce IOP, like cholinergic agonists, alpha agonists and ROCK inhibitors.

While these treatments can be effective in some patients, side effects and lack of durable responses often lead to many patients progressing through multiple therapies in an effort to control IOP.

Current treatments are legacy classes of drugs thus there is an unmet need for combinations and innovation in this therapeutic landscape.

This unmet need is a potential opportunity for Skye's SBI-100 OE to have a positive impact in patients with glaucoma.

Cannabinoid receptors are highly concentrated in the eye, especially in the anterior compartment that helps regulate IOP, and in the posterior compartment in the area of the retina and optic nerve.

Activation of CB1 has previously been shown to lower IOP in both animal and human studies.

SBI-100 OE represents a novel treatment option for glaucoma.

The active pharmaceutical ingredient ("API"), SBI-100, is synthetically created using rational drug design and biochemical engineering to increase the hydrophilic properties of Δ9-tetrahydrocannabinol.

This increased solubility coupled with a proprietary formulation to increase stability and residency time on the ocular surface allows for increased ocular tissue penetration.

Once inside the eye, abundant esterases release the prodrug moiety, allowing for an active THC molecule to bind to abundant CB1 receptors throughout key ocular tissues such as the trabecular meshwork and ciliary body.

Engagement of these receptors has been demonstrated to promote AH outflow via the trabecular meshwork as well as limit production via the ciliary body.

Importantly, the active component of SBI-100 OE has been shown to have neuroprotective effects in both in vitro and in vivo studies.

Since SBI-100 OE has been detected in retinal tissues in biodistribution studies, we are investigating if SBI-100 OE may additionally demonstrate a neuroprotective aspect in its treatment of glaucoma, providing further differentiation from the current therapies on the market.

We licensed SBI-100, the active pharmaceutical ingredient in SBI-100 OE, from the University of Mississippi ("UM").

SBI-100 OE is initially being developed to treat glaucoma and ocular hypertension.

SBI-100 is Δ9-tetrahydrocannabinol-valine-hemisuccinate (Δ9-THCVHS), a synthetically manufactured amide ester prodrug of Δ9-tetrahydrocannabinol molecule formulated in a proprietary nanoemulsion formulation.

In contrast to the parental Δ9-tetrahydrocannabinol molecule, which has very poor bioavailability, this novel synthetic molecule has been shown to penetrate into ocular tissue, where the prodrug moiety is quickly removed, allowing for the delivery of measurable amounts of active drug (Δ9-tetrahydrocannabinol) to the cornea, AH, iris-ciliary body, and retina choroid (RC), permitting interaction with cannabinoid receptors involved in regulating IOP.

Preclinical Data

In 2019, UM completed experiments showing that SBI-100 was statistically superior in lowering IOP compared to the prostaglandin-based therapy latanoprost, the current standard-of-care for treating glaucoma.

Statistical significance was reached across multiple time points during a seven-day course of dosing using a validated rabbit normotensive ocular model and SBI-100 exerted pharmacologic activity consistent with once-daily to twice-daily dosing.

Skye has since completed the development of a proprietary nanoemulsion formulation to optimize the amount of SBI-100 that can be delivered to the eye in a single drop while also improving the duration of activity.

Skye subsequently developed a proprietary nanoemulsion formulation to optimize the amount of SBI-100 that can be delivered to the eye in a single drop while also improving the duration of activity.

Importantly, this formulation can be sterilized by filtration without impacting the attributes of SBI-100.

This final formulation of the API, known as SBI-100 Ophthalmic Emulsion, significantly reduced IOP compared to other commercially available ophthalmic solutions and is now being evaluated in clinical trials.

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We evaluated the mechanism of action and IOP-lowering ability of the active moiety of SBI-100 when administered into an ex vivo model of a 3D-human trabecular meshwork using both healthy and glaucomatous-induced tissues.

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Data also revealed that biomarkers associated with neovascularization, a disease process of new blood vessel formation that can damage the retina in a variety of ocular diseases, was also inhibited by the active moiety, prompting further study for the utility of this drug in diseases of the retina.

Manufacturing of SBI-100 OE has been conducted in the United States.

We completed the manufacture of the clinical trial material for our Phase 1 clinical trial in September 2022.

We rely on compendial excipients that can be sourced from countries outside the United States, such as China.

In June 2022, we received approval from Belberry Limited, a certified Australian Human Research Ethics Committee, to begin our Phase 1 clinical trial for the study of our lead product candidate, SBI-100 OE.

We subsequently notified the Australian Therapeutics Goods Administration of our intent to initiate our Phase 1 clinical trial through the Clinical Trial Notification scheme.

In connection with this marketing approval to initiate the first-in-human trial for SBI-100 OE, we triggered the first milestone payment under our License Agreement for UM 5050 with UM.

We commenced enrollment and dosing of the Phase 1 in November and December 2022.

We expect our Phase 1 study to complete enrollment in the first half of 2023.

The Company has announced that the safety review committee ("SRC") for this study reviewed safety data from the first and second cohorts of the single ascending dose arm of the Phase 1 and recommended advancing to the next cohort.

After the review of the second cohort of safety data, the SRC also provided its recommendation that the study progress to the second arm of the Phase 1 study.

During the third and fourth quarter of 2022, we manufactured the active pharmaceutical ingredient to be used in our Phase 2 clinical trial.

The formulation and packaging of SBI-100 OE for its planned Phase 2 trial will be conducted by NextPharma Oy at its Finnish facility.

NextPharma is a contract manufacturing organization with strong capabilities in preservative-free multi-dose and blow-fill-seal packaging of eye drop dispensers.

In December 2022 we obtained FDA clearance of our Investigational New Drug application to conduct clinical studies in the US, clearing the path to commence our Phase 2 trial in the United States without having to first complete our Phase 1 study.

We expect to begin our Phase 2 trial in the middle of 2023.

The Phase 2 study will be a randomized, controlled, double-masked clinical trial in patients with glaucoma or ocular hypertension to obtain additional data to determine whether the topical delivery of SBI-100 OE is safe and well-tolerated, and whether the IOP is markedly different between SBI-100 OE and the placebo.

In January 2023, our Phase 2 clinical trial protocol received study level approval from a central institutional review board (“IRB”).

Additionally, in February 2023 we announced an agreement with Lexitas Pharma Services, Inc.

(“Lexitas”), a leading full-service ophthalmic-focused contract research organization (“CRO”), to conduct our Phase 2a study for glaucoma and ocular hypertension.

We have initiated research activities to explore the utility of SBI-200.

Early studies of SBI-200 demonstrated analgesic, anti-inflammation, anti-fibrotic and anti-seizure properties, including the potential treatment and management of several eye diseases, such as uveitis, dry eye syndrome, macular degeneration and diabetic retinopathy.

Data we presented at the American Association of Pharmaceutical Scientists ("AAPS") meeting held in November 2017 revealed that an early ocular formulation of SBI-200 was able to penetrate multiple compartments of the eye, including reaching the retina and the optic nerve.

We are further evaluating the possible utility and development of this compound as a therapeutic agent.

Cannabinoid Pharmaceutical Innovation Program (CPIP)

We are focused on the development of proprietary, synthetic cannabinoid derivatives that have been designed to improve the solubility, bioavailability and pharmacology of cannabinoids, with the goal of providing therapeutic benefits to fulfill unmet needs, while also providing the Company with strong intellectual property protection.

At the end of 2021, we announced that the Company would establish the Cannabinoid Pharmaceutical Innovation Program, or CPIP, to focus on targeting important signaling pathways in the endocannabinoid system ("ECS") which are relevant to various ocular pathologies and to identify possible new drug candidates to add to our development pipeline.

Moreover, new research continues to demonstrate that this cell signaling network can impact fundamental processes including synaptic plasticity, pain control, metabolism and immunity, highlighting that the ECS may be central to a wide range of diseases settings.

Thus, while our pipeline remains grounded in ophthalmology, the company may additionally explore ECS-modulating therapeutics to address pathologies beyond ocular disease.

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The CPIP reflects the Company’s continued commitment to expand its leadership in cannabinoid-based science and cutting-edge research that can be commercialized through new and existing technologies.

It leverages R&D initiatives with key opinion leaders with specialized research centers in the US and internationally, such as UM, University of Cordoba and University of Eastern Piedmont.

As a first step in building the CPIP in October 2021, we announced the establishment of a new Exclusive Sponsored Research Agreement ("ESRA") with VivaCell Biotechnology España, S.L.U ("VivaCell"), (formerly known as Emerald Health Biotechnology España, S.L.U), focused on developing and characterizing novel molecules that can affect the ECS for therapeutic benefit.

This agreement deepens the commitment of Dr.

Eduardo Munoz, Professor of Immunology, Department of Cell Biology, Physiology and Immunology of the University of Córdoba, Spain, and Director of the inflammation and cancer research group at the Institute Maimonides for Biomedical Research Córdoba, and Dr.

Giovanni Appendino, Professor of Organic Chemistry, Department of Pharmaceutical Sciences at the University of Eastern Piedmont, Novara, Italy, who are the principal investigators and continue to lead our scientific advisory board.

Under the terms of the ESRA the Company will approve and fund designated projects and have exclusive rights to all data and products, and any intellectual property resulting from this research collaboration will be owned by the Company.

Vivacell will receive a single digit royalty on all licensing revenue or other consideration paid to the Company by a third-party licensee, assignee or purchaser related to any product commercialized as part of designated projects.

Through the CPIP the Company intends to expand its relationships with other investigators and institutions who are leaders in the field of cannabinoid research.

Our Competitive Strengths

We are developing novel, proprietary cannabinoid derivatives that have the potential to treat ophthalmic disorders and other diseases with unmet needs.

Our lead product candidate, SBI-100 OE, is being developed for the treatment of glaucoma and ocular hypertension.

Currently, most approved drugs for glaucoma target similar molecular receptors and have similar mechanisms of action.

As a result there is a significant unmet medical need to develop new drugs that target different receptors using novel mechanisms of action.

SBI-100 OE has the potential to meet these needs.

The eye is rich in cannabinoid receptors, including CBR1, which is the main target for SBI-100 OE.

Our studies, along with multiple studies from other institutions, have demonstrated that activation of CBR1 can not only result in reduction of IOP, but also have anti-inflammatory, anti-fibrotic and anti-neovascular effects, which may offer potential benefits in other eye diseases beyond glaucoma.

Clinical Data

We commenced dosing of the Phase 1 clinical study in December 2022 and in November 2023 we reported that our Phase 1 data demonstrated that SBI-100 OE was safe and well-tolerated.

Importantly, we determined that there was minimal systemic exposure of the active metabolite of SBI-100 OE, THC, thus resulting in little to no side effects related to THC intoxication.

Moreover, it was determined that after multiple days of dosing we saw minimal hyperaemia (i.e.

redness of the eyes) following administration of SBI-100 OE.

In December 2022, w e obtained FDA clearance of our Investigational New Drug application to conduct clinical studies in the US and in January 2023, our Phase 2 clinical trial protocol received study level approval from a central institutional review board (“IRB”).

In February 2024, we announced that we completed enrollment of our Phase 2a clinical study for glaucoma and ocular hypertension.

Due to the early completion of enrollment of our Phase 2a study, topline data will be available in Q2 2024.

Development Plan

As a novel agent for the potential treatment of glaucoma and ocular hypertension, SBI-100 OE may represent a new treatment opportunity for physicians and patients and we are leading the field in this area of research.

With the implementation of the CPIP, we intend to leverage the potential success of SBI-100 OE to discover and develop additional novel cannabinoid derivatives capable of targeting multiple cannabinoid receptors in the eye for the treatment of ocular diseases.

The combined experience of our board of directors, management team, scientific and clinical advisors provides a significant strategic capability as we work to define and build our competitive advantage.

Our Business Strategy

Our goal is to become a premier developer of synthetic cannabinoid derivatives for global markets to treat significant unmet medical needs.

Our current operating strategy includes:

• selection and licensing of potential clinical targets based on internal and external published data, access to appropriate cannabinoids, and the impact of both developmental and market conditions;

• prioritization of product candidates based on their potential clinical utility and the market and competitive dynamics of the associated target indications;

• development and execution of an intellectual property strategy;

• clinical development and advancement of our current product pipeline;

• outsourcing activities such as clinical trial management and drug manufacturing via clinical research organizations ("CROs") and contract manufacturers, where possible and cost effective;

• obtaining regulatory direction and approval from the FDA, European Medicines Agency ("EMA"), and other regulatory agencies for our product candidates;

• discovery, research and development of additional novel cannabinoid-based molecules for future product candidates; and

• partnering, out-licensing, or selling our product candidates to pharmaceutical companies to focus on core strengths, maximize profits, and to bring our state-of-the-art therapeutics to patients in need.

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Sales and Marketing

We have not established a sales, marketing or product distribution infrastructure because our lead product candidates are still in research, discovery, pre-clinical or clinical development stages.

We are evaluating what we believe to be the optimal commercialization path for the Company, our product candidates, and patients.

Commercialization paths may include licensing/partnering with or selling assets to other commercial enterprises.

We are currently advancing a Phase 2a trial of SBI-100 targeting primary open-angle glaucoma (POAG) and OH.

This study enrolled 56 patients with POAG and OH, presenting intraocular pressures (IOP) between 21-34mmHg, and with no history of surgical interventions.

Participants were randomized to receive either 0.5% SBI-100, 1% SBI-100, or a placebo, administered twice daily over a 14-day period.

The study's main goal is to assess changes in diurnal IOP compared to placebo.

Secondary objectives are to evaluate safety, tolerability, any psychotropic effects, changes in diurnal IOP from the study's start, and to explore potential biomarkers.

Following the data release of our proof-of-concept Phase 2a study, we expect to initiate a Phase 2b study evaluating SBI-100 OE against a current standard of care such as timolol.

Successful completion of this Phase 2b study by the end of 2025 may present an opportunity to hold an end-of-Phase 2 meeting with the US FDA to discuss our plan for Phase 3 studies for marketing authorization in glaucoma.

Our industry is characterized by rapidly advancing technologies, intense competition, rapid pace of new innovation, and a strong emphasis on proprietary products and defense of intellectual property.

We face competition from pharmaceutical companies, including generic drug companies, biotechnology companies, drug delivery companies, and academic and research institutions, among others.

Competitors to nimacimab that are targeting peripheral inhibition of CB1 for the treatment of obesity and metabolic conditions include Inversago (acquired by Novo Nordisk in 2023) and Corbus Pharmaceuticals.

We are not aware of any competitor attempting to inhibit CB1 in the periphery via a monoclonal antibody.

There is also significant interest in and competitive activity targeting obesity and metabolic disorders from companies including Novo Nordisk, Eli Lilly, Boehringer Ingelheim, Zealand Pharma, Pfizer, AstraZeneca, Regeneron, Carmot Therapeutics (acquired by Roche), Amgen, Viking Therapeutics, Structure Therapeutics, Versanis (acquired by Eli Lilly), Biohaven, Keros Therapeutics, Scholar Rock, Terns Pharmaceuticals, Altimmune, Omega Therapeutics, Kallyope, Rivus and others including several privately financed companies whose information is not regularly disclosed to the public.

We are not currently aware of any competitors to SBI-100 Ophthalmic Emulsion that are developing a CB1 agonist for the treatment of glaucoma and OH.

Merck, Novartis, Abbvie, Bausch + Lomb, and Alcon are generally known competitors currently offering treatments for glaucoma and ocular hypertension.

Manufacturing

We do not own or operate, and currently have no plans to establish, any manufacturing facilities for final manufacture.

We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial manufacture of any products that we may commercialize.

For all of our future product candidates, we aim to identify and qualify manufacturers to provide the active pharmaceutical ingredient ("API"), formulation, and fill-and-finish services prior to submission of a New Drug Application ("NDA") to the FDA.

We expect to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities.

We do not own or operate manufacturing facilities and we rely on third-party contract manufacturing organizations to supply Skye with drugs for pre-clinical and clinical studies.

Nimacimab is a monoclonal antibody and we have developed a manufacturing process under current good manufacturing practice ("cGMP") to produce batches of drug substance and drug product for pre-clinical and clinical studies.

Drug substance for nimacimab will be produced by a contract manufacturer through recombinant DNA technology utilizing genetically engineered host cells, upstream cell culture processes and downstream purification methods as required to manufacture the drug substance.

Drug product will be produced by a contract manufacturer whereby nimacimab drug substance will be formulated and filled in to pre-filled syringes.

SBI-100 Ophthalmic Emulsion

Manufacturing of SBI-100 OE's active pharmaceutical ingredient, SBI-100, has been conducted in the United States by contract manufacturers under cGMP.

Formulation and packaging of SBI-100 OE for nonclinical and clinical use is manufactured by contract manufacturers with necessary controlled substance licenses with appropriate local, state and federal government agencies to conduct research, manufacture and distribute controlled substances like THC.

Intellectual Property

The success of most of our product candidates will depend in large part on our ability to:

• obtain and maintain patent and other legal protections for the proprietary technology, inventions and improvements we consider important to our business;

• Obtain and maintain patent and other legal protection for the proprietary technology, inventions and improvements we consider important to our business

• Prosecute our patent applications and defend any issued patents we obtain

• preserve the confidentiality of our trade secrets; and

• Preserve the confidentiality of our trade secrets

• Operate without infringing the patents and proprietary rights of third parties.

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We intend for these patent applications to cover, where possible, claims for composition of matter, medical uses, processes for isolation and preparation, processes for delivery and formulations.

As of the date of this Annual Report, we have licensed two inventions from UM which include U.S.

patents as well as a number of foreign counterparts, including the European Union, Japan, Canada and Australia.

The patents that we license cover composition of matter and preparation of SBI-100 and other cannabinoid receptor modulators, and their methods of use.

The US patent for SBI-100 is expected to expire in 2029.

Additionally, in July 2020 the United States Patent and Trademark Office granted a patent for SBI-200.

The expiration date of the US patent for SBI-200 is January 2037.

Under our license agreements, UM retains ownership over the licensed patents and control over the maintenance and prosecution of the licensed patents and patent applications.

We also rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position.

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The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed through a relationship with a third party.

Our industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.

We face potential competition from many different sources, such as pharmaceutical companies, including generic drug companies, biotechnology companies, drug delivery companies, and academic and research institutions.

Many of our potential competitors may have substantially greater financial, scientific, technical, intellectual property, regulatory and human resources than we do, and greater experience than we do commercializing products and developing product candidates, including obtaining FDA and other regulatory approvals for product candidates.

Consequently, our competitors may develop products for indications we pursue that are more effective, better tolerated, more widely prescribed or accepted, more useful and less costly, and they may also be more successful in manufacturing and marketing their products.

We also face competition from third parties in recruiting and retaining qualified personnel, establishing clinical trial sites and enrolling patients for clinical trials, and in identifying and acquiring or in-licensing new products and product candidates.

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The Company owns three granted U.S.

patents, 32 granted foreign patents, and 25 pending US and foreign patent applications directed to the compositions of matter for the nimacimab antibody and molecular variants, and to methods of treatment and uses of nimacimab and its variants for treating a number of diseases responsive to the modulation of the CB1.

The patents and applications, once granted, will expire between 2035 and 2036 and may be eligible for up to five years of extension (Hatch-Waxman).

SBI-100 and SBI-100 OE

As of the date of this Annual Report, we have licensed an invention from UM which include U.S.

patents as well as a number of foreign counterparts, including the European Union, Japan, Canada and Australia.

The patents that we license cover composition of matter and preparation of SBI-100, and their methods of use.

The US patent for SBI-100 is expected to expire in 2029.

Under our license agreement, UM retains ownership over the licensed patents and control over the maintenance and prosecution of the licensed patents and patent applications.

Licensing and Other Agreements

Skye wholly owns nimacimab.

There are no in- or out-licensing arrangements, no contingent value rights and no royalties payable or due to Skye relating to this molecule.

Under the terms of the securities purchase agreement (the "January PIPE SPA") entered into in connection with the January PIPE Financing, so long as the investors in the January PIPE Financing continue to beneficially own in the aggregate at least 40% of the securities issued in the January PIPE Financing (such securities, the "Closing Securities"), the Company may not transfer, license (other than in the ordinary course of business), encumber, or sell a royalty interest in any intellectual property relating to nimacimab unless Skye obtains the written consent of Qualified Investors that, together with their respective affiliates, beneficially own at least a majority of the then outstanding Closing Securities owned by the Qualified Investors and their respective affiliates.

The term "Qualified Investors" means any investor that, together with its affiliates, continues to own at least 80% of the securities originally purchased by it under the January PIPE SPA.

University of Mississippi granted Skye an exclusive license for all fields of use related to UM 5050 (referred to by Skye as SBI-100) and including, with the prior written consent of UM, the right to sublicense the intellectual property for UM 5050.

All fields of use means no restrictions on use of the underlying inventions, including developing UM 5050 to treat any disease through any form of delivery under the license agreement.

The license for SBI-100, a CB1 agonist, is expected to allow us to explore related uses for the active moiety of SBI-100.

In 2022, after notifying the Australian Therapeutics Goods Administration through the Clinical Trial Notification scheme of our intent to initiate our Phase 1 clinical trial for SBI-100 OE, we triggered and paid the first milestone payment under our License Agreement for UM 5050 with UM.

In 2023, we granted to Tautomer Bioscience an exclusive license to develop and commercialize SBI-100 as a novel suppository formulation for chronic intractable pain and other indications in South Africa and the rest of Africa.

We have retained certain rights and options to obtain rights to the future use of new jointly developed intellectual property and other intellectual property owned or controlled by Tautomer Bioscience related to SBI-100.

Government Regulation

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A failure to comply with such laws and regulations or prevail in any enforcement action or litigation related to noncompliance could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Regulation of Controlled Substances

Drug Enforcement Administration (DEA) Regulation

Certain cannabinoids are regulated as “controlled substances” as defined in the Controlled Substances Act (the “CSA”), which establishes registration, security, recordkeeping, reporting, storage, distribution and other requirements administered by the DEA.

The DEA is concerned with the control of handlers of controlled substances (and with the equipment and raw materials used in their manufacture and packaging) of controlled substances in order to prevent loss and diversion into illicit channels of commerce.

The DEA regulates controlled substances as Schedule I, II, III, IV or V substances.

Schedule I substances by definition have no established medicinal use and may not be marketed or sold in the United States.

A pharmaceutical product may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest risk of abuse and Schedule V substances the lowest relative risk of abuse among such substances.

Certain cannabinoids are listed by the DEA as Schedule I controlled substances under the CSA.

Consequently, their manufacture, shipment, storage, sale and use are subject to a high degree of regulation.

Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance.

The registration is specific to the particular location, activity and controlled substance schedule.

For example, separate registrations are needed for import and manufacturing, and each registration will specify which schedules of controlled substances are authorized.

The DEA typically inspects a facility to review its security measures prior to issuing a registration.

Security requirements vary by controlled substance schedule, with the most stringent requirements applying to Schedule I and Schedule II substances.

Required security measures include background checks on employees and physical control of inventory through measures such as cages, surveillance cameras and inventory reconciliations.

The registered entity must maintain records for the handling of all controlled substances and must make periodic reports to the DEA.

These include, for example, distribution reports for Schedule I and II controlled substances, Schedule III substances that are narcotics, and other designated substances.

The registered entity must also report thefts or losses of any controlled substance and obtain authorization to destroy any controlled substance.

In addition, special authorization and notification requirements apply to imports and exports.

In addition, a DEA quota system controls and limits the availability and production of controlled substances in Schedule I or II.

Distributions of any Schedule I or II controlled substance must also be accompanied by special order forms, with copies provided to the DEA.

The DEA may adjust aggregate production quotas and individual production and procurement quotas from time to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments.

To meet its responsibilities, the DEA conducts periodic inspections of registered establishments that handle controlled substances.

In the event of non-compliance, the DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations.

In certain circumstances, violations could lead to criminal prosecution.

The DEA has conducted a scientific review of the chemical structure of SBI-200 and determined that SBI-200 is not a regulated chemical nor controlled substance under the CSA.

This decision by the DEA should help the Company expand the network of clinical testing sites, permit a greater cross-section of patients to participate in studies of this drug, as well as speed the initiation of clinical trials for SBI-200.

SBI-100 remains a Schedule I controlled substance, pending a request to re-schedule SBI-100 after marketing authorization by the FDA.

Food and Drug Administration (FDA)

In the United States, pharmaceutical products are subject to extensive regulation by the FDA.

The FDA regulates drugs under the Food, Drug and Cosmetic Act ("FDCA") and its implementing regulations.

The FDA regulates drugs under the Federal Food, Drug and Cosmetic Act ("FDCA") and its implementing regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

Failure to comply with the applicable U.S.

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hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

requirements at any time during the product development process, approval process or after approval, may subject us to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug may be legally marketed in the United States, generally involves the following:

• completion of preclinical laboratory tests, animal studies and formulation studies in compliance with GLP regulations;

• submission of an Investigational New Drug application ("IND") to the FDA , which must be authorized as open before clinical trials may begin;

• approval and oversight of each study by an institutional review board ("IRB") before each clinical site may initiate the trial(s);

• conduct of laboratory tests, animal studies and formulation studies in compliance with GLP regulations;

• submission of an Investigational New Drug application ("IND") to the FDA , which must be found acceptable to proceed before clinical trials may begin;

• approval and oversight of each study by an IRB before each clinical site may initiate the trial(s);

• conduct of adequate and well-controlled clinical trials in accordance with good clinical practice ("GCP") requirements to establish the safety and efficacy of the proposed drug for each indication;

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• satisfactory development and completion of an FDA BioResearch Monitoring (BIMO) inspection of the clinical study sites which participated in the studies supporting the NDA application;

• FDA review and approval of the NDA.

Preclinical Studies

Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy.

An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND.

• FDA review and approval of marketing authorization application (NDA, BLA, etc).

Nonclinical Studies

Nonclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy.

An IND sponsor must submit the results of the nonclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND.

Some nonclinical testing may continue even after the IND is submitted.

An IND generally becomes effective 30 days after receipt by the FDA unless, before that time, the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold.

In such a case, the IND sponsor and the FDA work to resolve any outstanding concerns before the hold can be lifted and the clinical trial can begin.

An IND generally becomes effective 30 days after receipt by the FDA unless, before that time, the FDA raises concerns or questions related to nonclinical or manufacturing documentation or one or more proposed clinical trials and places the IND on clinical hold.

In such a case, the IND sponsor and the FDA work to resolve any outstanding concerns before the hold can be lifted and the clinical trial(s) can begin.

As a result, submission of an IND does not always result in the FDA allowing clinical trials to commence.

Clinical Trials

Clinical trials involve the administration of the investigational new drug candidate to humans under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects/patients provide their informed consent in writing for their participation in any clinical trial.

Clinical trials involve the administration of the investigational new drug candidate to humans under the supervision of qualified investigators in accordance with GCP requirements.

This includes the requirement that all research subjects/patients provide their informed consent in writing for their participation in any clinical trial.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated.

A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.

In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution.

Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on their www.clinicaltrials.gov website.

In addition, an IRB, either central or at each institution participating in the clinical trial must review and approve the plan for any clinical trial before the study commences at a site.

Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on the www.clinicaltrials.gov website.

Before marketing authorization, human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.

The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

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Reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

The drug is initially introduced into a small number of healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.

The drug is administered to a specific patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy and safety of the product for specific diseases and to determine dosage tolerance and optimal dosage.

The drug is administered to the established patient population expected to benefit based upon the risk/benefit profile.

Generally, this phase of studies are conducted at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

Reports detailing the results of the clinical trials must be submitted at least annually to the FDA and IND safety reports are submitted more frequently if serious adverse events possibly related to the investigational product occur.

Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all.

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Marketing Approval

Assuming successful completion of the required clinical testing, the results of the nonclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.

In most cases, the submission of an NDA is subject to a substantial application user fee.

Under the Prescription Drug User Fee Act ("PDUFA") guidelines that are currently in effect, the FDA has a goal of reviewing and responding to a submission within ten months from the date of “filing” of a standard NDA for a new molecular entity.

Assuming successful completion of the required clinical testing, the results of the nonclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an marketing authorization application requesting approval to market the product for one or more indications.

For drug products, or biologic products under the review of Center for Drug Evaluation and Research (CDER), the marketing authorization application is an NDA or a BLA, and submission is subject to a substantial application user fee.

Under the Prescription Drug User Fee Act ("PDUFA") commitments that are currently in effect, the FDA has a goal of reviewing and responding to a submission within ten months from the date of “filing” of a standard NDA for a new molecular entity.

This review typically takes at least twelve months from the date the NDA is submitted to the FDA because the FDA has approximately two months to make a “filing” decision.

However, if issues arise during the review, the FDA may request additional information and the review period may be extended to permit the applicant to provide and the FDA to review that information, which may significantly extend this time period.

In addition, under the Pediatric Research Equity Act of 2003 ("PREA"), as amended and reauthorized, certain NDAs or supplements to an NDA must contain data that is adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The process for review and issuance of a license for a BLA is similar to the NDA review path..

In addition, under the Pediatric Research Equity Act of 2003 ("PREA"), as amended and reauthorized, certain marketing authorizations or supplements to marketing authorizations must contain data that is adequate to assess the safety and effectiveness of the approved product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

The FDA also may require submission of REMS plan to ensure that the benefits of the drug outweigh its risks.

The FDA also may require submission of a Risk Evaluation and Mitigation Strategy (REMS) plan to ensure that the benefits of the drug outweigh its risks.

The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.

The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review.

The FDA may request additional information rather than accept an NDA for filing.

The FDA conducts a preliminary review of all pending marketing authorizations within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review.

The FDA may refuse to file the application and request additional information rather than accept marketing authorization application for filing.

In this event, the application must be resubmitted with the additional information requested.

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The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.

The FDA may refer an application for a novel drug and/or first-in-class product to an advisory committee.

The FDA may refer an application for a novel product and/or first-in-class product to an advisory committee.

The FDA may also refer to the advisory committee certain scientific questions raised by an application.

An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured.

Before approving a marketing authorization application, the FDA typically will inspect the facility or facilities where the product is manufactured.

The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.

The testing and approval process for an NDA requires substantial time, effort and financial resources, and each may take several years to complete.

Additionally, within the review period and before approving a marketing authorization application, the FDA will likely inspect one or more clinical trial sites to assure compliance with GCP requirements.

The testing and approval process for an NDA/BLA requires substantial time, effort and financial resources, and each may take several years to complete.

Data obtained from nonclinical and clinical testing are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.

The FDA may not grant approval on a timely basis, or at all.

After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter.

A complete response letter generally contains a statement of specific conditions that must be met to secure final approval of the NDA and may require additional clinical or nonclinical testing in order for the FDA to reconsider the application.

After evaluating the NDA/BLA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter.

A complete response letter generally contains a statement of specific conditions that must be met to secure final approval of the NDA/BLA and may require additional clinical or nonclinical testing in order for the FDA to reconsider the application.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter.

If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter for the NDA/BLA.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

For some products, such as our product candidates, an additional step of DEA review and scheduling is required.

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For some products, such as our product candidates where abuse potential is a possibility, an additional step of Drug Enforcement Administration (DEA) review and scheduling is required.

Post-Approval Requirements

Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product.

After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval.

There also are continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

The FDA may impose a number of post-approval requirements as a condition of approval of an NDA.

Products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product.

After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to FDA review and approval prior to implementation.

There also are continuing annual product fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

The FDA may impose a number of post-approval requirements as a condition of approval of an NDA/BLA.

For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

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• fines, warning letters or holds on post-approval clinical trials;

• refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;

• refusal of the FDA to approve pending NDAs/BLAs or supplements to approved NDAs/BLAs, or suspension or revocation of product licenses or approvals;

• product seizure or detention, or refusal to permit the import or export of products; or

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Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application ("ANDA").

An ANDA provides for marketing of a generic drug product that has the same active ingredients,

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dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

ANDAs are termed “abbreviated” because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and efficacy.

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however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

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Orphan Drug Designation and Exclusivity

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Competitors, however, may receive approval of different products for the same indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication than that for which the orphan product has exclusivity.

Regulation of Controlled Substances: