Skye Bioscience, Inc.

Ladies and gentlemen, thank you for standing by. My name is Yael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sky Bioscience second quarter 2025 financial results and business update call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I would now like to turn the conference over to Bernie Hertel, head of investor relations. Please go ahead.

Hello, and thank you all for participating in today's call. 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. 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 Dhillon, Sky's President and CEO.

Good afternoon, everyone. Today, we have most of our executive team participating in our financial results and operations update through prepared comments, or they're available to address questions during the Q&A. As we often say, we've managed the course with discipline, and we're now approaching the point where preparation becomes proof. This quarter marks a notable prelude to our reporting of our Phase IIa data for namazumab, Sky's differentiated peripheral CB1 inhibitor in terms of execution, as well as the clarity arising from the convergence of key activities, including the progress of our Phase IIa study, understanding of the mechanism of namazumab, and planning for next steps relating to our clinical development thesis. On today's call, we'll walk through the progress we've made, the data that we've generated, and the path we're charting forward. We'll cover three key areas. One, clinical progress, where we stand on our Phase IIa program and the top-line timing. Two, R&D Foundation, how we believe our antibody approach to CB1 inhibition is mechanistically distinct and supported by reproducible preclinical data. And three, where namastamab fits, positioning our asset within the evolving obesity treatment landscape, including gaps we believe are overlooked and not readily fulfillable with other mechanisms. Let's begin with the clinical progress. The phase 2A CBON trial is advancing as planned, on budget, and ahead of schedule. Enrollment was completed in February, ahead of schedule, and a 26-week visit for the last patient is projected to occur very shortly. The 26-week extension study is also now underway with both the monotherapy and combination arms enrolling. Approximately 50% of the patients from the original study are eligible for enrollment, and we're optimistic that a majority of the eligible patients will choose to participate in the extension study. The Data Safety Monitoring Committee has now reviewed the study four times and issued no recommendations for changes. This has been an effectively managed program from timeline management and data capture on various endpoints to regulatory coordination from the initial IND to the recent protocol updates to facilitate the 26-week extension. We look forward to completing treatment of our final enrolled patient for this first segment of C-Beyond and then stepping into the data analysis. We remain on track to deliver top-line results by late Q3, early Q4. Next, let's discuss R&D. As a reminder, Namazumab is a fully humanized, peripherally restricted CB1 antibody designed to target a well-established metabolic pathway, but to do so without the central toxicity that is historically limited CB1 inhibitors. We differentiate from non-antibody CB1 inhibitors in two fundamental ways. One, from a distribution standpoint, and two, mechanism. Both advantages that support a broader therapeutic window and target engagement in the periphery. Let's focus in on peripheral restriction. Namasumab shows negligible brain penetration across many different species. It's confirmed through PET imaging, cerebral spinal fluid analysis, and post-mortem tissue assessments. Even at high and repeated doses, the molecule remains peripherally compartmentalized. Next, let's talk about mechanism. Allosteric non-competitive inhibition. Namasumab binds at the allosteric site of CB1, retaining potency, even in the presence of elevated endocannabinoids, which is commonly associated with the obese state. This is in contrast to small molecules that bind to the orthosteric site of the CB1 receptor, which may face increasing competition to bind to the receptor and can lose efficacy in the presence of high concentration of endocannabinoids. We've evaluated this molecule through multiple preclinical studies using our human CB1 knock-in DIO mouse model. Based on these DIO mouse studies, we believe there are at least four distinct yet converging mechanisms that define the Massimab's action and form our platform's scientific core. One, caloric restriction via peripheral hormonal coordination. Numasumab reduces food intake by acting on adipose and gastrointestinal tissues to modulate appetite-regulating hormones such as GLP-1, leptin, and resistant. This enables a perfectly mediated reduction in central appetite signaling without requiring brain exposure. Two, improvement and restoration of glycemic control. We see consistent improvements in fasting glucose and insulin with significant improvements in glucose tolerance in DIO models, supporting namazumab's relevance for patients with prediabetes or insulin resistance. Three, enhancement of lipid metabolism. Namazumab reduces steatosis and circulating cholesterol levels, a direct benefit for patients with obesity-linked metabolic comorbidities like MAFLD or dyslipidemia. Four, reduction of obesity-induced inflammation. Numacimab reduces the level of key serum inflammatory mediators and macrophage infiltration in liver and adipose tissue, pointing to a disease-modifying role of numacimab related to comorbidities of obesity. These effects seen in our DIO models are robust, reproducible, and mechanistically distinct from, though complementary to, incretin-based agents. That gives us potential optionality across monotherapy, combination, and maintenance strategies. Okay, let's dive into that last point and touch on the new preclinical data that was shared today. To test how namazumab could perform in real-world settings, we recently conducted a preclinical DIO study asking three key questions. One, can namazumab enhance the efficacy of a suboptimal dose of terzapatide? This is highlighted by the yellow part of this study schematic. Two, does namazumab offer a more durable weight loss profile post-treatment? This is highlighted by comparing the yellow to the blue part of the study schematic. three, can namazumab act as a maintenance or rescue therapy after incretin discontinuation? This is comparing the yellow to the pink color as a clear control. Here's what we found. First, the combination efficacy. The preclinical DIO study findings demonstrated that at day 25, the combination of namazumab and a suboptimal trisepatide dose of three nanomoles per kilogram daily yielded 44% vehicle-adjusted weight loss. The combination outperformed either agent alone, with namazumab demonstrating 21.5% vehicle-adjusted weight loss and terzepatide demonstrating 29.7% vehicle-adjusted weight loss. The combination efficacy also exceeded an optimal dose of terzepatide of 10 nanomoles per kilogram daily, which resulted in 38.9% vehicle adjusted weight loss. This highlights a meaningful opportunity to develop combination strategies that achieve greater efficacy at lower doses, potentially improving tolerability, reducing costs, and expanding treatment accessibility. Now, point number two. Namasumab demonstrated durable post-treatment weight loss compared to incretin therapy after the therapy stopped. In comparison of namasumab and trizepatide following cessation of treatment in the preclinical DIO mouse model, namasumab demonstrated superior durability of weight loss. Specifically, the low-dose trizepatide group regained most of their original weight back eight days after coming off therapy. regaining 29.7% of weight by day 24 post-treatment. In comparison, the namazumab treated group maintained their post-treatment weight for approximately 20 days, regaining only 7.4% by day 24. This quote rebound effect has been well-documented in animal models and clinical data and represents a major issue for patients who come off incretin-based therapies. Namazumab's durability after cessation of therapy represents a potentially clinically beneficial and distinct outcome relative to incretin-based therapies. Let's move to the third point and now add back namazumab. Here we're looking at maintenance of weight loss using namazumab alone post-incretin treatment. When namazumab alone was used after an initial triseptide or combination treatment in the preclinical DIOMOS model, it greatly reduced rebound weight gain in these bottom three groups of mice. the suboptimal TRZ and NEMA combo in purple, the optimal TRZ dose in red, and the one we're going to zoom into is the suboptimal TRZ following the mass map, which is in pink. The key takeaway, no matter which of these line graphs you're looking at, is that the data show namazumab reinforcing its potential role as a post-incident weight loss maintenance therapy. And specifically, when namazumab was added following treatment with low-dose trizepatide, the pink line, namazumab reduced rebound weight gain from 29.7% to 12.8%. Taken together, these data suggest namazumab has utility across a broad continuum of care, not just initiating weight loss, but also sustaining it. This continues to strengthen our thesis and bring us to the real world setting and answering where namazumab fits and understanding the real world therapeutic gap. Again, we're not trying to displace We believe they are foundational and they're a backbone, but they also have well-recognized limitations. 58% of patients discontinue before 12 weeks, 80% by year two, up to 40% of weight loss can come from lean mass, and GI side effects remain a major driver of treatment discontinuation and patient dissatisfaction. This ultimately creates a significant therapeutic gap and one that Namasumab is designed to address. There's three market opportunities. One as a monotherapy for patients who can't tolerate or don't respond to incretin therapeutics. Two, as a combination partner to amplify efficacy or reduce incretin dose burden. And three, as a maintenance therapy to sustain weight loss after a desired weight is achieved with better tolerability. As developers are racing to optimize potency, dosing, and formulation, the field is now bumping up against a real-world ceiling, tolerability. And despite their clinical efficacy, incretin-based drugs are facing significant discontinuation rates, up to 50% within the first year, and nausea is the most frequently cited reason. As illustrated here, many of the late-stage programs cluster in the high nausea, high dropout zone, trading gastrointestinal burden for marginal weight loss gains. This has created a therapeutic paradox. There are actually stronger agents, but they have a weaker persistence. We believe that this is not just a side effect problem. We believe it's a structural vulnerability in the current obesity treatment paradigm, and it's leaving a growing population of patients without sustainable options. That's where namazumab comes in. Rather than replicate what's already been done, namazumab is designed to potentially expand the therapeutic options in obesity treatment, not only as a well-tolerated and effective monotherapy, but as a differentiated and essential combination where the current incretin-saturated market does not provide such options. Its mechanism offers alignment to GLP-1s, unlocking the combination potential without compounding the GI burden. This positions namazumab to potentially meet the needs of patients who discontinue using the drug due to side effects, who fail to sustain weight loss, or who require multi-pathway intervention for broader metabolic impact. For us at Sky, the opportunity's clear. Namazumab is not just an alternative. We believe it's a next generation backbone candidate for durable, combinable, and more accessible obesity care And it's a platform that can potentially extend beyond monotherapy to life cycle expansion across lines of therapy and patient segments that are currently underserved by today's options. And this is a key area to zoom in on. And we've been working on how best to frame it within the broader obesity treatment landscape. We believe we're entering the fourth wave of obesity pharmacotherapy, a new phase that's driven by scientific innovation still, but the needs to address real world complexity in patient care. The FDA has now approved six drugs for long-term obesity treatment, each marketing a step forward in the standard of care, from short-term stimulants to safer agents like Orlistat, to the rise of GLP-1-based therapies such as semaglutide and trizepatide, which have brought us closer to disease resolution. But a new chapter is unfolding. Today's obesity market is evolving beyond the singular goal of caloric restrictions. The next generation of anti-obesity medications, such as the peripheral approach, is being shaped by the need for broader metabolic impact, targeting pathways related to insulin sensitivity, lipid regulation, inflammation, and central reward signaling. This reflects a shift from weight loss alone to true disease modification, sustainable weight loss, and even addressing the other related comorbidities. With the top line data ahead, we're preparing to potentially demonstrate how namasumab delivers on the core needs of the evolving obesity treatment paradigm that, in our opinion, fit the definition of the fourth wave by improving quality and durability of weight loss through alternative metabolic pathways, better tolerability, and strategic combinability. Thank you again for listening to our update, and I'll wrap by emphasizing that the next 90 days will be busy, and Kate's going to walk you through a few of our upcoming milestones in her remarks. Overall, for us, finishing Q2 and heading into Q3 isn't just a checkpoint. It's a culmination of disciplined execution, scientific clarity, and focused investment in a differentiated mechanism. We appreciate your continued support, and now I'll turn the call to Kate, our CFO.