Skye Bioscience, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements (unaudited) for the three and nine months ended September 30, 2025 and 2024, together with the notes thereto and the consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission (SEC) on March 20, 2025.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements (unaudited) for the three months ended March 31, 2026 and 2025, together with the notes thereto and the consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (SEC) on March 10, 2026.

Previous wording

We are a clinical stage biotechnology company developing next-generation molecules that modulate G-protein-coupled receptors ("GPCRs") to treat obesity, overweight, and related conditions. Our lead candidate, nimacimab, is a peripherally restricted negative allosteric modulating antibody targeting the CB1 receptor.

Current wording

We are a clinical stage biotechnology company pioneering next-generation molecules that modulate G-protein-coupled receptors ("GPCRs") to treat obesity, overweight, and related conditions. Our lead candidate, nimacimab, is a peripherally restricted negative allosteric modulating antibody targeting cannabinoid receptor 1 ("CB1")—a key GPCR involved in metabolic regulation that is administered as a subcutaneous injectable initially for the treatment of obesity and overweight.

Previous wording

•In CBeyond, the nimacimab monotherapy arm did not achieve the primary endpoint of weight loss compared to placebo (-1.52% vs. -0.26 for placebo, mITT). Preliminary pharmacokinetic analysis showed an association between exposure and response, suggesting that the 200 mg, subcutaneous weekly dose was suboptimal as a monotherapy.

Current wording

•The nimacimab monotherapy arm did not achieve the primary endpoint of weight loss compared to placebo (-1.52% vs. -0.26 for placebo, mITT). Preliminary pharmacokinetic analysis suggested an association between exposure and response, indicating that the 200 mg, subcutaneous weekly dose was suboptimal as a monotherapy.

Previous wording

•In the combination arm, nimacimab 200 mg, subcutaneous weekly dose plus semaglutide demonstrated a clinically meaningful magnitude of weight loss compared to semaglutide alone (-13.2% vs -10.25%, p=0.0372, mITT), with no plateau being observed through Week 26. In the combination arm, 100% of patients achieved greater than 5% weight loss (vs. 85% with semaglutide alone) and 67% achieved greater than 10% weight loss (vs. 50% with semaglutide alone) based on the per protocol analysis. This finding supports potential further studies to evaluate combinations of nimacimab and incretin-based therapies. Other findings in the combination arm included:

Current wording

•In the combination arm, nimacimab 200 mg, subcutaneous weekly dose plus semaglutide demonstrated a clinically meaningful magnitude of weight loss compared to semaglutide alone (-13.2% vs -10.25%, p=0.0372, mITT), with no plateau being observed through Week 26. In the combination arm, 100% of patients achieved greater than 5% weight loss (vs. 85% with semaglutide alone) and 67% achieved greater than 10% weight loss (vs. 50% with semaglutide alone) based on the per protocol analysis. This finding supports potential further studies to evaluate combinations of nimacimab and incretin-based therapies, like semaglutide or tirzepatide. Other findings in the combination arm included:

Previous wording

◦A decrease in rebound weight gain in an analysis of participants 12 weeks post-treatment when nimacimab 200 mg (subcutaneous, weekly) was combined with semaglutide when compared to semaglutide alone (18.1% versus 49.8% weight rebound). Moreover, at 12 weeks post-treatment, the nimacimab plus semaglutide group maintained significant weight loss compared to the placebo group (p=0.006), while the semaglutide alone group lost significance over the placebo group (p=0.12) and followed a trajectory of rebound weight gain consistent with previously reported data (Wilding et al., 2022, STEP-1 Trial Extension), which demonstrated that patients will gain a majority of weight back within 1-year of stopping treatment with semaglutide.

Current wording

◦A decrease in rebound weight gain in an analysis of participants 12 weeks post-treatment when nimacimab 200 mg (subcutaneous, weekly) was combined with semaglutide when compared to semaglutide alone (17.8% versus 37.3% weight rebound). Moreover, at 12 weeks post-treatment, the nimacimab plus semaglutide group maintained significant weight loss compared to the placebo group (p=0.006), while the semaglutide alone group lost significance over the placebo group (p=0.12) and followed a trajectory of rebound weight gain consistent with previously reported data (Wilding et al., 2022, STEP-1 Trial Extension), which demonstrated that patients will gain a majority of weight back within 1-year of stopping treatment with semaglutide.

Previous wording

Patients who completed 26 weeks of treatment in the primary phase of the study were eligible to enroll in a 26-week extension for a potential full treatment duration of 52 weeks with a 13-week follow-up period. In September 2025, we completed the enrollment in the extension study. A total of 43 patients were enrolled, with 19 and 24 patients in the combination and monotherapy cohorts, respectively. In the combination arms, patients will continue with blinded treatment with nimacimab or placebo and will continue receiving semaglutide (Wegovy®). Patients in the monotherapy arm will receive nimacimab 300 mg during the extension. Enrollment for the extension is complete. Skye expects to report data from the extension study in Q1 2026.

Current wording

Patients who completed 26 weeks of treatment in the Phase 2a study were eligible to enroll in a 26-week extension for a potential full treatment duration of 52 weeks with a 13-week follow-up period. A total of 43 patients were enrolled, with 19 and 24 patients in the combination and monotherapy cohorts, respectively. In the combination arms, continued with blinded treatment with nimacimab or placebo and continued receiving semaglutide (Wegovy®). Patients in the monotherapy arm received nimacimab 300 mg during the extension.

Previous wording

We were incorporated under the laws of the State of Nevada on March 16, 2011. Our headquarters are based in San Diego, CA, and we also maintain administrative office space in San Francisco, CA. Since our incorporation, we have devoted substantially all of our efforts to building our product portfolio through the acquisition of clinical assets and licensing agreements, carrying out research and development, building infrastructure and raising capital.

Current wording

We were incorporated under the laws of the State of Nevada on March 16, 2011. Our headquarters are based in San Diego, CA. Since our incorporation, we have devoted substantially all of our efforts to building our product portfolio through the acquisition of clinical assets and licensing agreements, carrying out research and development, building infrastructure and raising capital.

Previous wording

During the three and nine months ended September 30, 2025, we incurred $9,357,444 and $30,892,454 in research and development expenses primarily related to our Phase 2a clinical trial of nimacimab for obesity and the manufacturing costs associated with future trials. During the three and nine months ended September 30, 2024, we incurred $4,883,337 and $10,908,538 in research and development expense primarily related to our efforts in conducting our Phase 2a clinical trial for SBI-100 OE and costs related to our Phase 2a clinical trial for nimacimab for obesity.

Current wording

During the three months ended March 31, 2026, we incurred $7,935,680 in research and development expenses primarily related to our Phase 2a clinical trial of nimacimab for obesity and the manufacturing costs associated with future trials. During the three months ended March 31, 2025, we incurred $7,197,257 in research and development expense primarily related to our efforts in conducting our Phase 2a clinical trial related to our Phase 2a clinical trial for nimacimab for obesity.

Previous wording

Our general and administrative expenses have fluctuated year-over-year as we have entered into various strategic acquisitions to restructure and reposition our company. Additionally, as a business in the early stages of drug development we are in the process of scaling our operations by hiring additional employees and building the infrastructure necessary to increase efficiencies. These initiatives have resulted in additional costs related to the implementation of certain systems, insurance, facilities, legal, tax and accounting costs. As a public company, we expect to incur additional expenses related to insurance, investor relations activities, legal and other administration and professional services to comply with the rules and regulations of the SEC, the Financial Industry Regulatory Authority ("FINRA") and Nasdaq. Other significant costs are expected to include legal fees relating to patent and corporate matters, business development costs and fees for consulting services. To incentivize our employees and be competitive to retain strong talent we issued additional equity awards in 2025 and 2024, which have resulted in increased stock-based compensation expense. We also expect that certain general and administrative expenses which are commensurate with headcount, will continue to increase in the future in order to support our expected increase in research and development activities, including increased salaries, technology, facilities and other related costs.

Current wording

Our general and administrative expenses have fluctuated year-over-year as we have entered into various strategic acquisitions to restructure and reposition our company. Additionally, as a business in the early stages of drug development we are continually evaluating our operations and infrastructure to identify areas where we can increase efficiencies. As a public company, we expect to incur additional expenses related to insurance, investor relations activities, legal and other administration and professional services to comply with the rules and regulations of the SEC, the Financial Industry Regulatory Authority ("FINRA") and Nasdaq. Other significant costs are expected to include legal fees relating to patent and corporate matters, business development costs and fees for consulting services. To incentivize our employees and be competitive to retain strong talent we issued additional equity awards in 2026 and 2025 and we repriced certain options in the first quarter of 2026, which have resulted in increased stock-based compensation expense. We also expect that certain general and administrative expenses which are commensurate with headcount, will continue to increase in the future in order to support our expected increase in research and development activities, including increased salaries, technology, facilities and other related costs.

Previous wording

The estimate for legal contingencies and related expenses relates to a litigation matter that related to a former employee of the Company. As of December 31, 2023, we had posted an appellate bond that was collateralized by an irrevocable letter of credit equal to, $9,080,202, approximately 150% of the liability recorded on our balance sheet. As of December 31, 2024, we were successful in our appeal of the judgment in the Ninth Circuit Court of Appeals and the case was remanded back to the District Court for a new trial, as a result of which we reduced the estimated legal contingency based on new key assumptions. The final amount of the loss and loss recoveries remains uncertain. We believe that it is at least reasonably possible that the estimated amount of the potential loss may change in the near term. As of September 30, 2025, the estimated legal contingency, including accrued legal expenses, is $2,054,357.

Current wording

The estimate for legal contingencies and related expenses relates to a litigation matter that related to a former employee of the Company. As of December 31, 2023, we had posted an appellate bond that was collateralized by an irrevocable letter of credit equal to, $9,080,202, approximately 150% of the liability recorded on our balance sheet. As of December 31, 2024, we were successful in our appeal of the judgment in the Ninth Circuit Court of Appeals and the case was remanded back to the District Court for a new trial, as a result of which we recovered the appellate bond and reduced the estimated legal contingency based on new key assumptions. The final amount of the loss and loss recoveries remains uncertain. We believe that it is at least reasonably possible that the estimated amount of the potential loss may change in the near term. As of March 31, 2026, the estimated legal contingency, including accrued legal expenses, is $2,574,759, an increase of $505,692 from December 31, 2025, due to accrual adjustments for services by legal firms in relation to the ongoing Cunning litigation.

Previous wording

Other (income) expense primarily includes a gain from the sale of the Avalite Sciences, Inc. ("AVI") building (the "AVI building") in the first quarter of 2024, and interest expense. These expenses are offset by interest income earned on our cash and cash equivalent balances and short term investments.

Current wording

Other (income) expense primarily includes interest income earned on our cash and cash equivalent balances and short term investments.

Previous wording

Research and development expenses for the three months ended September 30, 2025, increased by$4,474,107 as compared to the same period in 2024. The net increase in research and development expenses was primarily due to:

Current wording

Research and development expenses for the three months ended March 31, 2026, increased by$738,423 as compared to the same period in 2025. The net increase in research and development expenses was primarily due to:

Previous wording

•Clinical trial costs increased by $578,014 due to increased site and patient costs related to our Phase 2a clinical study for nimacimab.

Current wording

•Clinical trial costs increased by $190,765 due to increased site and patient costs related to our Phase 2a clinical study for nimacimab.

Previous wording

•Contract manufacturing costs increasedby $2,704,671 from drug substance, product, labeling and packaging costs related to resupplying our extended Phase 2a clinical study for nimacimab, manufacturing in anticipation for our clinical study of nimacimab, and process intensification and dose optimization work.

Current wording

•Contract manufacturing costs increasedby $203,916 from drug substance, product, labeling and packaging costs related to resupplying our extended Phase 2a clinical study for nimacimab, manufacturing in anticipation for our expansion study of nimacimab, and process intensification and dose optimization work.

Previous wording

•Discovery research and development costs increased $479,430 from increased work to interrogate nimacimab's mechanism of action and for life cycle management.

Current wording

•Discovery research and development costs decreased $168,387 primarily due to a reduction in work for life cycle management partially offset by increased work to interrogate nimacimab's mechanism of action.

Previous wording

•Quality assurance costs increased by $100,653 from routine vendor site audits.

Current wording

•Quality assurance costs decreased by $64,896 from routine vendor site audits.

Previous wording

•Consulting, advisory and professional fees increased by $353,956 to support our nimacimab program.

Current wording

•Consulting, advisory and professional fees increased by $216,413 to support our nimacimab program.

Previous wording

General and administrative expenses for the three months ended September 30, 2025, decreased by$731,837 as compared to the same period in 2024. The decrease in general and administrative expenses was primarily due to:

Current wording

General and administrative expenses for the three months ended March 31, 2026, increased by$176,381 as compared to the same period in 2025. The decrease in general and administrative expenses was primarily due to:

Previous wording

•Salaries, benefits and other direct employee related costs decreased by $209,163 primarily due to lower headcount and timing of new hires.

Current wording

•Salaries, benefits and other direct employee related costs decreased by $275,661 primarily due to lower headcount and timing of new hires.

Previous wording

•Consulting, advisory and professional fees decreased by $496,410 primarily due to the timing of tax accounting services and financial advisory services.

Current wording

•Consulting, advisory and professional fees decreased by $28,245 primarily due to the timing of tax accounting services and financial advisory services.

Previous wording

•Investor relations, marketing and communications expenses increased by $50,022 primarily due to additional content creation and digital marketing expenses.

Current wording

•Investor relations, marketing and communications expenses decreased by $335,032 primarily due to reductions in content creation and digital marketing expenses.

Previous wording

•Recruiting fees decreasedby$272,699 primarily due to the one time cost to hire an executive in the prior period.

Current wording

•Recruiting fees decreasedby$33,750 primarily due to the one time cost to hire an executive in the prior period.

Previous wording

•Legal and professional fees increased by $171,707 due to increased patent prosecution activity and litigation defense costs.

Current wording

•Legal fees increased by $988,624 due to increased patent prosecution activity and litigation defense costs.

Previous wording

For the three months ended September 30, 2025, we had an decrease of other income of$560,625 as compared to the same period in 2024 primarily due to:

Current wording

For the three months ended March 31, 2026, other income decreased$493,238 as compared to the same period in 2025 primarily due to:

Previous wording

•Decreases in interest income and other income of $489,223 due to decreased interest from our cash equivalents and short-term investments yields as a result of the decrease in cash equivalents and short-term investments on hand.

Current wording

•Decreases in interest income and other income, net of $449,439 due to decreased interest from our cash equivalents and short-term investments yields as a result of the decrease in cash equivalents and short-term investments on hand.

Previous wording

We have incurred operating losses and negative cash flows from operations since our inception, and as of September 30, 2025, we had working capital of $31,556,897, an accumulated deficit of $172,432,523, and stockholders’ equity of $32,836,185. We had unrestricted cash and cash equivalents and short-term investments in the amount of $35,312,308 as of September 30, 2025, as compared to $68,415,741 as of December 31, 2024. For the nine months ended September 30, 2025 and 2024, the Company incurred losses from operations of $43,268,021 and $19,526,617, respectively. For the nine months ended September 30, 2025 and 2024, the Company incurred net losses of $41,482,851 and $16,820,644, respectively.

Current wording

As of March 31, 2026, we had working capital of $8,162,037, an accumulated deficit of $199,383,847, and stockholders’ equity of $9,011,804. We had unrestricted cash and cash equivalents and short-term investments in the amount of $17,108,629 as of March 31, 2026, as compared to $25,737,221 as of December 31, 2025. For the three months ended March 31, 2026 and 2025, the Company incurred losses from operations of $12,674,366 and $11,759,562, respectively. For the three months ended March 31, 2026 and 2025, the Company incurred net losses of $12,509,361 and $11,103,319, respectively.

Previous wording

•the cost of manufacturing clinical supplies, and establishing commercial supplies of our drug candidates, both in the U.S. and internationally;

Current wording

•the cost of manufacturing clinical supplies, and establishing commercial supplies of our drug candidates;

Previous wording

The primary use of cash for our operating activities during the period was to fund research development activities for our clinical product candidate and general and administrative activities. Our cash used in operating activities also reflected changes in our working capital, net of adjustments for non-cash charges, such as stock-based compensation, depreciation and amortization, amortization of debt discount and the gain on sale of asset.

Current wording

The primary use of cash for our operating activities during the period was to fund research development activities for our clinical product candidate and general and administrative activities. Our cash used in operating activities also reflected changes in our working capital, net of adjustments for non-cash charges, such as stock-based compensation, depreciation and amortization.

Previous wording

Cash used in operating activities of $33,296,042 during thenine months ended September 30, 2025, reflected a net loss of $41,482,851, partially offset by aggregate non-cash charges of $6,511,734 and included a$1,675,075 net cash inflow in our operating assets and liabilities.

Current wording

Cash used in operating activities of $8,557,917 during thethree months ended March 31, 2026, reflected a net loss of $12,509,361, partially offset by aggregate non-cash charges of $1,677,490 and included a$2,273,954 net cash inflow in our operating assets and liabilities.

Previous wording

Non-cash charges included$6,149,154 for stock-based compensation expense primarily attributable to the recognition of current period expense on prior grants and$543,343 in depreciation and amortization. The net change in our operating assets and liabilities included a$2,200,980 cash outflow from theincreasein our prepaid expenses and other current assets, a$1,689,053 net cash inflow from increase in our accrued expenses and other current liabilities and a$2,187,002 cash inflow from theincrease of our accounts payable.

Current wording

Non-cash charges included$1,496,989 for stock-based compensation expense primarily attributable to the recognition of current period expense on prior grants and$172,886 in depreciation and amortization. The net change in our operating assets and liabilities included a$220,450 cash inflow from thedecreasein our prepaid expenses and other current assets, a$38,381 net cash outflow from decrease in our accrued expenses and other current liabilities and a$1,903,517 cash inflow from theincrease of our accounts payable.

Previous wording

Cash used in operating activities of $17,064,377 during the nine months ended September 30, 2024, reflected a net loss of $16,820,644, partially offset by aggregate non-cash charges of $1,515,581 and included a $1,759,314 net change in our operating assets and liabilities.

Current wording

Cash used in operating activities of 9,185,480 during thethree months ended March 31, 2025, reflected a net loss$11,103,319, partially offset by aggregate non-cash charges of$2,379,288 and included a$461,449 net cash outflow in our operating assets and liabilities.

Previous wording

During the nine months ended September 30, 2025, our cash used in investing activities related primarily to the purchase, net of maturities, of $16,871,229 in short-term investments and $180,763 in net proceeds from the sale of the AVI building.

Current wording

During the three months ended March 31, 2025, our cash used in investing activities related primarily to the purchase of