Skye Secures $17M And Acquires Novel Phase 2-Ready Cannabinoid 1 Receptor Inhibitor

Skye Bioscience, Inc. SKYE has undertaken a strategic initiative that expands the company's resources and technologies focused on developing therapeutic products focused on the endocannabinoid system ("ECS").

Skye raised $17 million in new capital and acquired Bird Rock Bio Inc. With Bird Rock's lead asset, nimacimab, Skye intends to advance two complementary but distinct phase 2 first-in-class drug products targeting the cannabinoid 1 receptor ("CB1"), focusing initially on glaucoma and chronic kidney disease.

Financing, Acquisition of Bird Rock, and Reverse Split

5AM Ventures, Versant Ventures and another investor invested an aggregate of $12 million in Skye via a private investment in public equity (PIPE). In connection with the PIPE and the acquisition of Bird Rock Bio, Skye issued 581.4 million shares of its common stock at a price of approximately $0.021 per share and 557.2 million common shares to the existing preferred shareholders of Bird Rock that participated in the PIPE. In addition, the PIPE investors were granted 581.4 million warrants with an exercise price of approximately $0.021.

Skye also issued a short-term convertible note with a principal amount of $5 million as well as warrants to another investor. The aggregate of the PIPE financing and convertible note equal a total investment of $17 million, of which approximately $9 million has been used to secure an appellate bond for an existing litigation matter of the company as the company appeals the related lawsuit and pursues insurance recovery.

Skye also acquired 100% of the outstanding capital stock of Bird Rock for total consideration of approximately $20 million which was payable to Bird Rock stockholders solely in shares of Skye's common stock. Certain newly issued shares and warrants related to both the PIPE, convertible note and acquisition of Bird Rock are subject to a customary lock-up agreement.

Skye's cash and cash equivalents are expected to fund its operations into 2024 through its phase 1 data read-out by the end of Q3 2023 for SBI-100 and its interim phase 2a data read-out in H1 2024 for SBI-100.

Following the closing of the PIPE financing, convertible note financing and the acquisition of Bird Rock, Skye has approximately 3.08 billion shares of common stock outstanding (approximately 4.18 billion shares of common stock outstanding on a fully diluted basis). Immediately following the closing of the PIPE financing, the convertible note financing and the acquisition of Bird Rock, the former equity holders of Bird Rock owned approximately 31.4% of the outstanding shares of common stock, the investors in the PIPE financing owned approximately 37% of the outstanding shares of common stock and the equity holders of Skye immediately prior to the closings of the PIPE financing, the convertible note financing and the acquisition of Bird Rock owned approximately 31.6% of the outstanding shares of common stock.

Skye has submitted a notice to FINRA of a proposed 1:250 reverse stock split that would result in 1 share being issued for every 250 outstanding shares of common stock of Skye. Pending the completion of FINRA's review, implementation of the reverse split by Skye and meeting the applicable listing requirements, the company's goal is to uplist to a national stock exchange.

Skye's management team will continue to lead the combined company following the transactions, with Punit Dhillon as CEO and chairman of the board of directors. In connection with the closing of the acquisition of Bird Rock, Skye's Board of directors was expanded from five to seven members. Andy Schwab, managing partner of 5AM Ventures, and Paul Grayson, CEO of Tentarix Biotherapeutics and venture partner at Versant Ventures, joined the board of directors of Skye as new directors.

Benzinga Cannabis Capital Conference

The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Photo: Benzinga edit with photo by geralt and lindsayfox on Pixabay