Skye Bioscience Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 20, 2025

There are 14 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. My name is Jael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sky Bioscience Year End twenty twenty four Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

I would now like to turn the conference over to Bernie Hertel, Head of Investor Relations. Please go ahead.

Speaker 1

Hello, and thank you all for participating in today's call. Leading the discussion today are Puneet Villan, Sky's President and CEO and Caitlin Arsenault, Sky's CFO. Before we begin, I'd like to caution that comments made during this conference call will contain forward looking statements under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995, including statements about Sky's expectations regarding its development activities, timelines and milestones.

Speaker 1

Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially and adversely, and reported results should not be considered as an indication of future performance. These forward looking statements speak only as of today's date, and the company undertakes no obligation to revise or update any statements made today. I encourage you to review all the company's filings with the Securities and Exchange Commission concerning these and other matters. I'll now turn the call over to Puneet Dillon.

Speaker 2

Good afternoon, everyone. Thank you for joining us today on Sky's fourth quarter and year end twenty twenty four earnings call. We appreciate your interest in Sky and thank you to our shareholders. Joining me is our entire executive team and they will stay online for the Q and A portion after the prepared remarks. At the start of 2024, we identified critical questions about peripherally restricted CD1 inhibition and implemented a clear vision and a plan for executing an ambitious clinical trial to demonstrate proof of concept of our novel CB1 inhibitor, namosumab, in patients with obesity and overweight.

Speaker 2

This plan led to a $90,000,000 investment from top life science institutional investors in the early part of twenty twenty four, ultimately allowing Sky to execute on its goals for the year. I'm happy to report that not only did our team meet, but we exceeded our expectations. First, we submitted and received clearance of our obesity IND in January 2024. Second, following the completion of our $90,000,000 fundraising, we immediately initiated planning of our clinical operations activities for namosumab, which culminated in the initiation of Ebeyond in August of twenty twenty four. And third, our team's ability to execute efficiently resulted in rapid enrollment into the C beyond clinical trial and I'm proud to announce that as of February 28, we have completed our enrollment with 136 patients and over enrollment from our originally planned 120 patients.

Speaker 2

And as a result of this accelerated over enrollment, we now expect final top line data from all patients in late Q3 or early Q4. This is potentially three months earlier than our prior guidance, allowing us to forego the originally planned interim analysis and instead report the full twenty six week data ahead of schedule. Fourth, on the manufacturing front, we transferred the manufacturing process for namosumab to our manufacturing partner and have initiated GMP manufacturing runs as well as implemented plans for optimization, scale up and commercial capabilities for namosumab. Fifth, the excellent safety profile established in namassumab's Phase one trial continues as our independent Data Safety Monitoring Board, the DSMB, has held two meetings to review the Phase 2a safety data and recommended that we continue the study as planned. The study remains blinded through to the completion of the twenty six week treatment and the thirteen week follow-up period and a third DSMB review is scheduled for April.

Speaker 2

To support Sky's increasing focus on the development of dimasumab, we made the strategic decision in 2024 to discontinue SBI-one hundred development following the Phase 2a clinical trial. We believe that the reallocation of our resources from SBI-one hundred to dimasumab was a valuable step to help us to reach the milestones that we've achieved. Separately, 2024 also showcased important progress in the field of CB1 inhibition. Phase 2a clinical results from mamunivant, Novo Nordisk small molecule CB1 inverse agonist revealed valuable insights for the class and for us avenues of differentiation for namastimab. Ahead of our all important forthcoming namastimab clinical trial, our preclinical and modeling work continues to paint a favorable picture of namastimab's safety advantage as well as support the idea that peripheral CB1 inhibition is sufficient for weight loss.

Speaker 2

To briefly reorient you on our preclinical findings, the first question relates to efficacy and whether a true peripherally restricted CB1 inhibitor like namastimab can lead to meaningful weight loss. This is a reasonable question as the first drug approved for weight loss in this class, rimonovant, preferentially entered the brain and was originally believed to mediate its effects via central CB1 inhibition. Since then, we've learned so much more about the sufficiency and importance of peripheral CB1 inhibition versus the role of central CB1 inhibition. If you haven't already, I would encourage you to listen to our webcast from July 2024 and November 2024, where our clinical advisor, Doctor. Marcus Goncalves, and our CSO, Doctor.

Speaker 2

Chris Twitty, elegantly explain why we believe that peripheral CB1 inhibition is not only sufficient, but necessary for weight loss based on the mechanism of CB1 inhibition. Supporting this thesis, we announced in 2024 the first demonstration that namaximab can drive significant weight loss in a diet induced obesity mirroring model. And to our knowledge, this data is the first to describe that an antibody that does not cross the blood brain barrier and preferentially target CB1 receptors in the periphery can cause weight loss in a DIO mirroring model. We look forward to sharing even more data that demonstrates the ability of namastimab to not only drive weight loss, but also impact multiple metabolic processes associated with ABC and its comorbidity. The second, and we think most important question for this class of drugs relates to safety.

Speaker 2

As we know, rimonovant was ultimately taken off the market in Europe because of a significant rate of neuropsychiatric side effects and importantly, a higher rate of suicidal ideation compared to placebo. The concerns around this mechanism were further exacerbated by the announcement by Novo Nordisk that while significant weight loss was noted at sixteen weeks, there were dose dependent increases in neuropsychiatric side effects with monglunivant. At SKY, we believe namizumab is uniquely positioned to potentially be the safest of the CB1 class of drugs because of its superior restriction from the brain. As we have reported previously, we saw no neuropsychiatric side effects from our Phase one study that treated over sixty patients with the NASMAb for four weeks. And as highlighted earlier, the Phase 2a study has a quarterly independent Data Safety Monitoring Board review of safety data.

Speaker 2

Our original investment and continued efforts to develop nimazimab is based on the premise that neuropsychiatric concerns still hinder small molecule CB1 inhibitors. Whereas to date, namastimab's truly peripheral mechanism has demonstrated meaningful weight loss without the safety liability seen with even the peripherally restricted small molecule CB1 inhibitors. As mentioned earlier in our press release, we announced that we have implemented a protocol extension for the ongoing CB ON trial. Specifically, with enrollment now complete, patients in all four treatment arms will have the opportunity to continue receiving therapy for an additional twenty six weeks, increasing our treatment period to fifty two weeks compared to twenty six weeks previously. This means that by Q2 of twenty twenty six, guide will have substantially greater safety and efficacy data, which we believe will significantly bolster our regulatory package and help discern namastimab's therapeutic profile and differentiation.

Speaker 2

Where 2024 was about successfully implementing our clinical operations plan and completing enrollment for CBeyond, twenty twenty five is about data. First and foremost, our clinical data from C beyond, but also data from our R and D efforts, which we hope will continue to demonstrate the impact of nimatumap in the DIO model. Our ongoing preclinical research aims to highlight a further understanding of how nametimab's differentiated mode of CD1 inhibition acts peripherally to promote coordinated modulation of hormones and inflammatory mediators, lipid metabolism and glycemic control to ultimately yield significant weight loss and a productive metabolic homeostasis. We anticipate that these efforts will yield additional data in the upcoming quarters, enhancing our understanding of nimatumab's capability. Additionally, we are advancing our research to explore other metabolic indications where inflammation and fibrosis play a significant role in disease progression.

Speaker 2

By utilizing translational models, we aim to identify new therapeutic applications for namastimab. Looking ahead, we plan to engage with regulators to align on our Phase 2b dose escalation study, which we anticipate initiating by the second quarter of twenty twenty six. And concurrently, we're strengthening our manufacturing capability and evaluating alternatives to bring down our cost of goods sold. These efforts are crucial for maintaining our development pace and preparing for potential commercial demand. We remain focused on namassumab's attractive market opportunity and based on our ongoing assessment of both current and future market dynamics in obesity and overweight, combined with the latest developments underscoring the appeal of some of the novel mechanisms in obesity, we continue to view nimasumab as a differentiated alternative to enable weight reduction, while addressing the limitations of incretin based therapy.

Speaker 2

And with the translational workflow in full swing, we not only aim to identify new therapeutic applications for nimatumap, we are also focused on the development of next generation GPCR targeting molecules to address various metabolic disorders, which could potentially lead to innovative treatments in this field. Our overarching message is simple. We believe obesity and overweight conditions are extremely heterogeneous, demanding multiple effective therapeutic options, while the GLP-one receptor agnus space, whether we're speaking of oral or injectable drugs, is becoming crowded and competitive. Recent industry deals do in fact acknowledge the merit and value of alternative anti obesity mechanisms to start evolving the weight loss world beyond ingredients. And SKY is uniquely and strongly positioned with another promising alternative mechanism and highly differentiated product with potential to fulfill the unmet needs of this diverse and massive patient population rather than fighting for the same first line thoughts of a well established mechanism.

Speaker 2

So we encourage discerning investors and other stakeholders to look under the surface and understand these dynamics. We believe namosumab is uniquely positioned to play a role as a part of an inevitable broadening of the anti obesity toolbox. With an important Phase two inflection point this year, now is an opportune time to evaluate CB1 targeting. At our June event during ADA, ahead of the top line twenty six week data, we will review our plans along with additional preclinical data that demonstrate namaximab's unique advantages. We look forward to sharing these new insights with you.

Speaker 2

I want to thank all of the patients, physicians and clinical coordinators who are participating in the C Beyond trial. Without them, we would not be where we are today. They are a vital reason why companies like SKY are able to potentially bring life altering drugs to the market. Thank you for your continued support as we advance nimasumab and work to solidify SKY's position as a pioneer in peripherally restricted CB1 inhibition. With that, I'll turn the call over to Caitlin, our CFO.

Speaker 3

Thanks, Puneet. After the market closed today, we issued a press release and filed Sky's Form 10 ks with the Securities and Exchange Commission, outlining our annual financial results. We encourage you to reference the filing for details of our financials and the risk factors described therein. I will now provide a brief overview of key financial results for the fourth quarter and year ended 12/31/2024. Research and development expenses for the three months ended 12/31/2024 were $7,800,000 as compared to $1,600,000 for the same period in 2023.

Speaker 3

The increase was primarily due to contracted clinical and manufacturing costs associated with our Phase 2a C beyond study for nimasumab and employee related benefits. Research and development expenses for the year ended 12/31/2024 were $18,700,000 as compared to $5,800,000 for the same period in 2023. The increase was primarily due to contracted clinical and manufacturing costs associated with our Phase 2a C beyond study for nimasumab. The remainder of the increase resulted from increases in discovery research efforts, consulting fees, employee benefits driven by increases in headcount and general expenses. General and administrative expenses for the three months ended 12/31/2024, were $4,600,000 as compared to $2,500,000 for the same period in 2023.

Speaker 3

The increase was primarily related to non cash incentive stock based compensation, payroll benefits and other employee costs, professional services including fees for tax, audit, legal services, financial advisory services and other general business expenses. General administrative expenses for the year ended 12/31/2024 were 17,700,000 as compared to $7,900,000 for the same period in 2023. The increase was primarily related to non cash incentive stock based compensation, professional services, including fees for tax, audit and legal services, financial advisory services, patent prosecution for the nimasumab IT and other general business expenses. The net loss for the year ended 12/31/2024 totaled $26,600,000 with non cash share based compensation expense of $8,300,000 compared to $37,600,000 for the year ended 2023 with non cash share based compensation expense of $1,000,000 The primary reason for the significant decrease related to the acquisition of the nimatumab in process research and development asset for $21,200,000 during the year ended 12/31/2023, all of which was expensed upon acquisition. In addition, during 2024, we recognized a $4,200,000 gain from the partial derecognition of our contingent legal liability and a $2,000,000 gain from the settlement of insurance litigation with our former D and O carrier, $3,000,000 in interest income and a gain of $1,400,000 from the sale of real estate.

Speaker 3

On 12/31/2024, Guy had cash and cash equivalents of $68,400,000 Notably, during 2024, we further remediated our litigation matters and in the fourth quarter, we collected $2,000,000 in insurance settlement proceeds and exonerated the bond related to the restricted cash balance, which allowed us to recover the $9,000,000 restriction on our cash. In addition, during 2024, we eliminated all of our related party balances, including the conversion of our debt. During 2024, our operating cash burn averaged $6,300,000 per quarter, increasing to $8,100,000 in the fourth quarter. In 2025, we expect to maintain at least this level of expenditure as we progress through the CBON study and increase our manufacturing efforts. Our team's strength has always been its ability to quickly adapt not only strategically, but also financially to reduce waste and maximize spend.

Speaker 3

We believe that our capital will fund our operations through at least the first quarter of twenty twenty seven. Our cash runway includes the capital necessary to complete the Phase 2a study for nimatumumab and reach key clinical milestones, including the receipt of top line data in late Q3 or early Q4 twenty twenty five, '50 '2 week data in Q2 twenty twenty six and the manufacturing work required to supply the Phase 2b study. Our runway currently excludes the Phase 2b and Phase three clinical study costs. But most importantly, we are funded for at least nine months after the expected fifty two week data from the nimasumab study, which is expected in Q2 twenty twenty six. This concludes our prepared comments for today.

Speaker 3

Thank you very much for joining us and we'll now open the call for questions from our covering sell side analysts. Operator, over to you.

Operator

Thank you. The floor is now open for questions. Your first question comes from the line of Kristin Kuska of Cantor. Your line is open.

Speaker 4

Hi, everyone. Thanks for taking the questions and congrats on completing enrollment ahead of schedule. So wanted to ask, as we think about both a twenty six and a fifty two week readout now, what do we know or what can we translate from some of the preclinical model work to understand what the weight loss curves could look like at these time points and essentially what an extra twenty six weeks could mean for the potential?

Speaker 2

Hey, Kristen. It's Puneet here. Thanks. That's a great question and thanks for joining the call. I guess I can just kick it off just to kind of give a little bit of context here what we're trying to achieve with the extension and then hand it over to Chris.

Speaker 2

So we obviously are really excited about the extension. I mean the decision to implement the extension study was strategic and we're recognizing the value of a longer efficacy and safety data, which we believe is really important for this continuing to generate with the clinical trial that we have. So, the idea was to have additional data for our regulatory discussions as well as for the next steps for the program. I think it's hard to extrapolate what's exactly happening pre clinically from the human studies, but that is also something that we're exploring where we have additional preclinical data. But I'll turn it over to Chris to just specifically answer the preclinical question.

Speaker 5

Yes. Hi. Thanks for the question. It's a fair question, one that we're looking carefully at. And so, we're approaching this in a few different ways.

Speaker 5

But if we're focused only on the preclinical side, we really are looking at exposure and understanding. So we've done a clinical analysis of a PK profile, if you will, and understanding how that exposure relates to efficacy in the DIO using weight loss and other important biomarkers associated with efficacy. And looking at sort of how that timeframe in an obviously compressed sort of DIO model, how that relates to something that is more elongated such as a clinical trial. And so we're using that guide as sort of guidepost to help us understand the potential timing required for loss in the clinical trial. We're also looking at some of the historic data, notably, rimonovant, which of course is a small molecule, a little bit different mechanism there, but still one that I think can help guide in terms of pathway.

Speaker 5

And so when you collectively look at that and we'll be certainly, putting some of this data out in the future and we'll talk more about it in 2025. But when you look at those, it's pretty evident that adding the full to Mabel extension will allow us to reach a deeper weight loss. That's our feeling. And to Puneet's point, we don't know exactly where that sweet spot will be. But certainly, we expect based both on the preclinical exposure data that I mentioned as well as the historic data to think that's going to be advantageous and really allow us to uncouple a deeper weight loss and a better signal overall.

Speaker 4

Okay. Thanks. And I know your previous clinical study was really safe and you didn't see any of the neuropsych AEs. But with the DSMB reviews, would they pick up any of this and report it? Or would it have to be deemed a certain grade for it to translate to telling you about it?

Speaker 2

Yes. In terms of the safety analysis that's ongoing here is pretty straightforward. It's an independent data safety monitoring board that meets and reviews the data and they give a go, no go on continuing the trial. So, that information still is blinded to the management. And at the moment that's all we can really ascertain from that is that there have been two independent meetings that have happened.

Speaker 2

They happen quarterly. There's another one planned in April. And the fact that the trial has continued is a signal for that all the safety information that's been reviewed is of no concern.

Speaker 4

Okay. Thanks. And I know you launched this study back in August. So, thinking about the extension, was the decision made ahead of time where patients essentially would know that they have the option to continue treatment beyond that twenty six weeks? So essentially what I'm trying to figure out is with the data set in 2Q twenty six, do you expect it will be full data set with all of the patients or could it be a little bit smaller in light of that?

Speaker 2

Yes. So let me just clarify that. So the whole the point of removing the interim analysis is because the enrollment has obviously gone faster than expected and by eliminating that we're now having the full twenty six week data on one hundred percent of the patients. So, we gain a complete dataset, obviously that's supporting our decision making, our overall regulatory discussions and all of those other things. But independent of that, I think you implied this in the first part of your question is just about the timing of the extension study and why we may not have considered it earlier on just to be transparent.

Speaker 2

We have always recognized the value of having a longer term efficacy and safety data readout. So the twenty six weeks was what we originally had planned. But it was also around what the drug supply that we had at the moment. So now we've also addressed that over the course of the year. So we have full drug supply and manufacturing that now supports continuing to have the commitment for extending this trial.

Speaker 2

So securing kind of the reliability and the scalability of our manufacturing has been a key part of this next decision now that we can extend our current trial and have the additional data points that we're looking for from weight loss and also some of the other things that we're measuring in in the trial for another twenty six weeks.

Speaker 4

Great. Thanks, everyone. Look forward to the data this year.

Speaker 2

Thanks, Kristin.

Operator

Your next question comes from the line of Ted Tenthoff of Piper Sandler. Your line is open.

Speaker 6

Great. Thank you. And my congrats too on the early enrollment and really excited to get the full data set in the back half. I'm wondering if this changes, either the powering or anything along those lines in terms of the analysis that you're going to be able to do, I. E.

Speaker 6

Do you lose anything or were you losing anything from the prior interim analysis? And does this adjust your plans and timeframes with respect to moving into Phase 2b? Thanks.

Speaker 2

Yes. So just to answer the first part of the question there, Ted, thanks again for joining in. So our protocol said one hundred and twenty are valuable patients and to reach that goal, we've enrolled one hundred and thirty six. So overall, there's no change in statistics, but the obviously this translates into more robustness and efficacy and safety analysis as we have more patients. So for us, the regulatory pathway doesn't change here.

Speaker 2

It's just a larger dataset and it's just enhancing kind of confidence for everything that we're working on as well as all of our future interactions that we would have with the agency regarding our subsequent trial. There was a second part to your question that I need you to repeat again.

Speaker 6

Yes. No worries. Timing on the Phase IIb, pardon me, does this move up potential timing on the Phase

Speaker 2

2b? Yes. It's a great question. So the fifty two week extension results will be available in the first half of twenty twenty six. I mean, you can easily kind of do the math there.

Speaker 2

The goal here is that it does allow us to engage with regulators with a more robust dataset. And but that doesn't really change from what we were planning to do with the twenty six week top line data. So, I think for us the timelines have continued to accelerate overall for our subsequent clinical program and in terms of our regulatory interactions. Our Phase 2b and subsequent development efforts would all be based off of the top line data. So now that we'll have that in late Q3, early Q4, we plan to immediately engage with regulators both FDA and EMEA for the subsequent larger studies.

Speaker 6

Awesome. Thank you so much.

Operator

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

Speaker 7

Hey, congrats on the progress and thank you for providing this update. That's great news that you've completed enrollment in CBON ahead of schedule. We had a question about the preclinical data for namassumab that you'll be presenting in the second quarter. Can you just provide a little color around what we should be looking for?

Speaker 2

Hey, Jay. Thanks for joining the call. And yes, that's a great question. We're excited about a lot of different data now that that DIO model that Chris has been working on is up and running. So I'll turn it over to Chris and he can expand on that.

Speaker 5

Hi, Jay. Thanks for the question. Yeah, as we said, we're really excited about the direction that our preclinical data is heading. So we're looking forward to sharing just a more robust data set, including some really nice biomarker work that touches on some of the key mechanisms as well as the differentiation around our CD1 inhibitor. So you're well aware of the safety enhancements that our approach takes.

Speaker 5

Well, we have some other data that suggests a deeper mechanistic differentiation as well. So look forward to sharing that as well as starting to touch into the combination approaches that you might imagine are relevant. So again, we're looking forward to building out and having a nice dataset

Speaker 8

in

Speaker 5

the summer.

Speaker 2

Yes. If I could just elaborate, Zaid. The interesting thing for us has been that last year when we were beginning to work on all of that, we didn't have the backdrop of additional data from the small molecule, excuse me, one inhibitor. So, obviously with that data and you know that we've spent quite a bit of effort walking the street through the PK analysis and a side by side comparison. So, we've continued to build on that and even in our JPMorgan conversations we came back and debriefed and said, okay, where are the gaps that we're having people maybe struggling with in terms of comparisons against this our approach versus other CB1s in development.

Speaker 2

And that's the key thing is that our preclinical data package I think is continuing to become hopefully the most robust and the standard going forward. The key thing we want to continue to point to is a differentiated product profile with this preclinical data. It should be informative to give confidence that there's more likelihood of success here in what's translated in the clinic. The early data that we presented in November was the first indication of that showing that there was sufficiency of peripheral mechanism or peripheral driven weight loss. And now, it's just enhancing that with the combo expectation, ahead of our clinical data that will help to just bolster the strength of our overall thesis.

Speaker 7

Great. We're definitely looking forward to that. And then maybe just one other question from us. There were two major obesity deals last week that sparked a lot of interest among investors, partly because they were both in non GLP-one mechanisms and included potential for monotherapy and GLP-one combos. Can you just talk about any lessons or read across to Sky and the types of deals or partners you might consider for namassumab?

Speaker 2

Yes. I'll start there and I can let our Chief Operating Officer speak to that as well. The for us it's been really exciting. At JPMorgan, we made the comment that GLP-one space is crowded and you're going to get to see a lot more attention on the non incretin space taking shape. Obviously, that's been led by the CAGRISEMA data that we saw in fall of twenty twenty four and then the AMOCRIS data that followed that and now two back to back deals that have happened in the Amlan space.

Speaker 2

And the comment that we made in terms of all of our discussions that we had in Q1 was that Amlin and CB1 are the other two mechanisms that have gotten the most attention in terms of being validated and it's just a matter of time for CB1 to have that clearing event. For us, CB1 had that clearing event a couple of times, Ramanuand and it had it again with the mongluniband data. The only issue is that the small molecules continue to have a neuropsychiatric concern. So we knew that back in 2023 when we acquired VirTrak. It's never been an issue for us.

Speaker 2

We've always built our thesis on the fact that we are going to have a CB1 that's just as competitive in the non incretin space that doesn't have the safety concerns. And that's been our thesis and that's what we're executing again. So for us this new deal flow and the size of those deals is of note because it's obvious that the pharma and strategics are placing bets and they're placing big bets like in the case of Roche. They've really expanded their footprint now and I think they're being competitive relative to Noble and Lilly, especially in the non accretive space. Two has been digging in a lot more on this because we've been doing a bunch of primary research.

Speaker 2

So I'll let him talk to that as well.

Speaker 8

Yes. Thanks, Puneet and hey, Jay, thanks for the question. Yes, I'll make this quick. But like Puneet said, we've been digging in a lot with our own primary and secondary research. And I think what I will say about these last most recent deals, which certainly aligns with what we've been hearing from the KOLs is that, they're less and less excited about just more GLP-one drugs and more and more excited and really asking for more and more alternative mechanisms of action that can one drive still drive clinically meaningful weight loss.

Speaker 8

They don't necessarily need to be 25% weight loss, but if they are more tolerable, they can be so again clinically meaningful and convenient for patients, then those are drugs that the physicians think have a real place in the market, not just the second line therapies, but potentially in the first line setting as well. So I think lots of farmers are starting to see that certainly based on the deals we're seeing and that sort of these secondary or these alternative mechanisms of action are going to be become more and more important in the future.

Speaker 7

Thank you. It's super helpful and I appreciate all the color and congrats again on the progress.

Speaker 2

Thanks, Jay.

Operator

Your next question comes from the line of Andy Hsieh of William Blair.

Speaker 9

Thanks for taking our questions. Kind of a three parter, if you don't mind, for the Phase II Cp1 study. So first and foremost, obviously very encouraging that the rapid re enrollment rate that you mentioned. I'm curious if you can share some of the, you know, on the ground physician feedback or investigator feedback on on the enthusiasm. That's number one.

Speaker 9

Number two, I guess one of the differentiating factors for the study was the use of DEXA scans to really delineate fat loss and also lean body mass loss. And I'm just curious with the extension out to fifty two weeks, do you add another DEXA scan at the end of the study there? Or just kind of how do you think about, you know, the number of, of, of scans to get kind of a longitudinal look into the relative composition of weight loss? And, and lastly, it's, it's kind of a biostatistical question. So I'm curious on the removal of the interim, does that preserve some of the powering as you kind of look at the primary endpoint?

Speaker 2

Yes, Andy. Thanks. Those are great questions. So I'm going to actually turn it over to Doctor. Arora as everyone, if you're following, you know, Doctor.

Speaker 2

Arora joined the company at a real opportune moment. We had just begun the CB ON study and thanks to his leadership has kind of immediately rolled up his sleeves. He was on the road for three weeks and got a chance to see and get clinical sites up and running and to his credit we've also been successful in terms of expanding into academic centers. So I'll let him elaborate on all three of these questions. I think it's in his wheelhouse.

Speaker 10

Yes. Thanks, Puneet. So Andy, thanks for the questions. As far as the investigator question is concerned, we've had a lot of excitement from investigators. Obviously trials are popular right now.

Speaker 10

People are very motivated and enthusiastic to come into these trials and try different ways that may help them. So we, you know, we're actually we are very grateful to all the efforts that the investigators have put in and the participants have put in and that's helped us to enroll at at at a really nice space. We, we were able to activate all of a sudden. We did hold back IT and imminent academic center that was good for the overall as you can see. Your next question was with relationship with two DEXA scans on position.

Speaker 10

And as you know, we're doing longitudinal scanning in this first twenty six weeks, three years. The final scan of that takes place at the end of that period of the study. We will continue to do the measurement during the extension. So we will do a DEXA scan in the middle at twelve or thirteen weeks, whatever that time point is, and then one again at the end of treatment. So we'll continue that trajectory of looking at what happens to body composition through the study.

Speaker 10

Now as far as the interim endpoint is concerned, there were some concerns about powering and how we deal with doing an interim endpoint and how that might affect the power of the final endpoint given as you've already heard given how close the final analysis is to what would have been the interim analysis. Now that we're not doing the interim analysis, I think those questions just simply go away. And yes, we do. We preserve all our power to be able to do that final analysis.

Speaker 9

That's super helpful. Thank you so much.

Operator

Your next question comes from the line of George Farmer of Scotiabank. Your line is open.

Speaker 11

Hi, good afternoon. Thanks for taking my questions. I want to talk a little bit about the DSMB analysis and understanding that you're blinding to their discussions and outcomes. I was wondering if there are any stopping rules that are in place where maybe CNS effects are apparent and you need to be notified immediately. I'm sure that it's a very sensitive area given the history of this drug class.

Speaker 11

Also, maybe while we're on that, just thinking about what Novo has reported with Lutuban or what they haven't reported, are we absolutely certain that the neuropsychiatric side effects are in fact CNS mediated or might there be some sort of peripheral mechanism of action that's causing this? Thanks.

Speaker 2

Hey, George. Thanks. I'll turn that over to Doctor. Arora. He might want to take both those questions and I don't know, Chris, if you want to talk about any of that from a preclinical standpoint on the second part.

Speaker 10

Yes. So, George, the DSMB gets all the data. We provide them with everything. We provide it in an unblinded manner. So, they're able to assess everything that's going on in the study.

Speaker 10

They're obviously blinded, so we don't actually get that. The study does have stopping criteria, which are every other study. But the DSMB by its charter has right to tell us based on what they're seeing that we need to modify the study or we need to make changes or stop the study or dosing or anything of that sort. They've done two reviews so far. They have told us that the study is fine, continue as is.

Speaker 10

So that's what we know. We are coming to another full review in April and we'll keep you all posted. But at this point, we had no indication that the DSMB thinks that any modification of the study is needed based on what they are seeing. And they do have all data. So they are looking at all of the neuropsychiatric assessments and the neurological exams, etcetera.

Speaker 10

Your second question was related to your psychiatric effect. I mean, I guess in an absolute sense, I can't tell you what the neuropsychiatric effects are because of we believe that because CV1 is being locked in the higher centers of the brain. But, and Chris can elaborate on this if you want to hear more. But we do have some really nice models that show how the neuropsychiatric effects are dependent on the concentrations on the brain, not on the concentrations in the periphery. So even after you reach full engagement in the periphery as with monlunabant, when you increase doses at that point, what's changing is the concentration in the brain and reaching the IC90 there.

Speaker 10

And we see the rate of neuropsychiatric effects increasing. So based on those models, we do believe that this is very much a CNS effect and not driven parasitic.

Speaker 11

Okay. That's helpful. And one more, if I may. At the fifty two week read, I imagine this is going to be over an open label portion of the study, are you going to be able to follow the placebo patients?

Speaker 10

Yes. So the way the fifty two week is designed, the extension, the monotherapy patients, which is the primary arm of the study, go to open label nimasumab. So we are crossing over the placebo as well so that everyone gets an opportunity to be on active drug, which will help us to retain some patients as well. And also give the placebo patients an opportunity. It'll give us another twenty six week cohort that will go twenty six weeks besides those that will get the fifty two weeks of treatment.

Speaker 10

So we won't have a placebo arm in that. In the combination arm though, we are because the combination arm is already getting an active treatment, we're able to just continue them to fifty two weeks in a blinded manner. So they will continue to get placebo.

Speaker 5

All right. That's good.

Speaker 11

Good. That'll be very informative. Thanks very much.

Operator

Your next question comes from the line of John Wilben of Citizens JMP. Your line is open.

Speaker 12

Hey, thanks for taking the question. Just wondering, what do you attribute the quicker enrollment to, especially when the melanoban data came out with lower than expected weight loss, the neuropsychiatric events? I'd imagine that might dampen some enthusiasm, but obviously something else was going on. So what were you guys hearing from Stetson investigators?

Speaker 2

Hey, Jonathan. Thanks for joining and appreciate your patience on the call list here. The, yes, the good news here is obviously, overall as Doctor. Arora commented in what we've seen across the board, you can evaluate other agents. Obesity studies have had generally an uptick of interest from patients.

Speaker 2

But to the credit of the SKY operations team, the CROs involved and the clinicians that we're working with, we're also working with some really fantastic investigators. Like I mentioned earlier, investigators that have experienced what other agents experience even with remonavant. So we're working with a few academic centers and there's been generally strong I think follow through in terms of patient recruitment, patient interest, keeping patients kind of informed with what's going on. And it's an alternative mechanism too, right? So the challenge you have with most of the larger GLP-one studies is that a lot of patients did discontinue and there's issues regarding tolerability.

Speaker 2

Here that you're offering an alternative mechanism And keep in mind, we also had an arm that had a combination with GLP-one. So it's a combination of factors that I think alongside of some good recruitment tactics that the team implore to get that done.

Speaker 12

Got it. And then maybe two others for me. You really just mentioned some optimization work to move to the monthly dosing. Can you talk a little bit more about that and how important that is to your product profile? And then, last one for me, can you discuss your potential utility in diabetics?

Speaker 12

I know they're not included in, C Beyond. So how do you think about the diabetic opportunity and how you pursue that in subsequent trials? Thanks.

Speaker 2

Great. So I'll turn it over to Tu to talk about from GMP manufacturing and the steps that we've taken there. And then probably Doctor. Arora or Chris, you guys can both answer the diabetic question. Yes.

Speaker 2

Thanks. So in terms

Speaker 8

of your question around monthly dosing, we think it's important. I think where it becomes important for the patient, we think it will help with a sort of convenience and potentially compliance. Where it helps with Sky is it certainly helps with from a COGS cost of goods perspective. So but ultimately, again, I mentioned earlier that we did do a KOL, have been doing KOL primary research and those KOLs actually made pretty clear that weekly dosing is really quite acceptable for them and for patients as well. So from a TPP's perspective, if we landed on a weekly dosing, we don't think that's going to be a major sort of deterrent or hit on the target profile.

Speaker 8

But if we are able to get some monthly dosing, then that certainly will be beneficial from a cost perspective for the company and probably would provide some additional convenience, but we don't think it's a a major deterrent.

Speaker 2

Yes. Just on the manufacturing process, we haven't really spent much time speaking about that. But as you've seen in the press release today, we've now begun to discuss that and be transparent that our GMP manufacturing process for nimasumab is well underway and we're really proud of the work that Thieu and his entire team has been working on. So that's including process optimization, ensuring batch to batch consistency and then just preparing for larger scale production. So we don't feel we have any challenges to meet the demands that we expect for the subsequent regulatory studies and then ultimately for commercialization.

Speaker 2

We're doing it really I think elegantly in terms of how to scale up and doing it responsibly from a capital allocation standpoint. There was a question regarding just about the Type two diabetes population. So I think maybe Doctor. Roy, you're probably more informed on how that mechanism is at play. And I don't know if Chris you want to talk about it from a preclinical standpoint.

Speaker 10

Yes. We're very excited to move forward and be able to test in people with diabetes as well. We know that part of the mechanism of action is insulin sensitivity. And so that plays a big role in the treatment of type two diabetes. Of course, the weight loss itself and the fact that the action is on adipose tissue and is anti inflammatory.

Speaker 10

So there's a whole lot of different things there, which may play really well with diabetics. And anecdotally, we've heard from our partners and KOLs in Europe that when they use rimono band, they were quite pleased with how it worked with diabetics. So it's just an interesting nugget out there that creates even more interest for us. We will definitely be testing this in diabetics. I think once we have proof of mechanism and then moving forward, we will plan how to do a study in people with diabetes as well.

Speaker 5

I'd just add briefly on the preclinical side, we are seeing some really interesting, this is in not necessarily a diabetic model, but in some of the DIO work we're doing, some of those fibrotic immune pathways that are very much relevant to patients with diabetes modulating the right way. And so whether or not it's a focused study directly or if we're thinking about potential comorbidities of those that are pre diabetic, We built this pathway mechanistically seems to have touched in a very productive fashion on some of those pathways. So that's a very nice detail regarding the CD1 inhibition.

Operator

Your next question comes from the line of Albert Lowe of Craig Hallum. Your line is open.

Speaker 13

Hi, everyone. Thanks for taking my question. I was wondering with this change of having this open label extension portion, whether there are any other notable changes in design? Then I was wondering if there will still be this thirteen weeks of follow-up period after the treatment period is done?

Speaker 2

Yes. Thanks, Albert. Thanks for staying on the call and following through with the question. The, we yes, at the moment, we haven't spelled out all of the updates regarding the complete design for now. What we've stated is that we're extending all of the arms from twenty six weeks to fifty two weeks.

Speaker 2

So stay tuned for additional kind of data in terms of anything else we might explore in those in the added twenty six weeks. What was the other part of your question?

Speaker 13

Yeah. I think that that was the the main part. But,

Speaker 10

yeah, there will be there's a list to complete what you were asking. There will be a thirteen week follow-up after the fifty two week extension too for those who roll over.

Operator

Yeah.

Speaker 13

Okay. All right. Great. Thanks. And I was wondering, you've been very, I guess, clear about kind of setting the bar for an 8% difference at twenty six weeks.

Speaker 13

And I guess I understand there won't be a placebo arm at this fifty two week time period. And I think Chris mentioned potential deeper weight loss. But can you share any other expectations for this fifty two week time point?

Speaker 2

Yes. I mean, it's great. That's a billion dollar question that you're asking. And unfortunately, we don't have any data on that at this point in time. But the goal here is for the twenty six weeks is to show that eight percent and we will also have now indication from the extension study how patients are doing on a longer time point.

Speaker 2

So, at the twenty six week time point, I hope that we are going to be able to see the curves continuing to show deeper weight loss with the mechanism. Now to point to other TB1 inhibition data namely rimonovant that was the case and we expect to be just as competitive here with the peripheral driven approach that we have. So I think it's still that's still pending and I don't want to speculate on anything other than what we've already kind of designed in our current program. That

Operator

concludes our Q and A session. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

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Earnings Conference Call
Skye Bioscience Q4 2024
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