On Monday, Skye Bioscience Inc. (NASDAQ:SKYE) experienced a revision in its stock outlook by Oppenheimer, with the price target being lowered to $21 from the previous $25. The adjustment follows the pharmaceutical company's announcement that its Phase 2a trial for an ophthalmic emulsion aimed at treating glaucoma did not achieve its main goal of reducing intraocular pressure (IOP). Consequently, Skye has decided to cease the development of this particular treatment.
The discontinuation of the SBI-100 ophthalmic emulsion (OE) project is seen as a pivot point for the company. Oppenheimer maintained an Outperform rating on the stock, acknowledging the setback but expressing support for Skye's strategic decision. The firm believes that halting the SBI-100 program allows Skye to reallocate resources towards the advancement of nimacimab, an investigational treatment for obesity.
Despite the trial's outcome and a 9% drop in Skye's stock value today, which contrasted with a 1% gain in the XBI biotech index, Oppenheimer views the current market reaction as an opportunity. The investment firm's confidence in nimacimab is based on its unique mechanism of action, which involves the inhibition of peripheral CB1 receptors. A Phase 2 study for nimacimab is planned to commence in the third quarter of 2024.
The revised price target reflects the removal of SBI-100 from Oppenheimer's financial model for Skye Bioscience. The firm anticipates that the refocused efforts on nimacimab will extend Skye's expected cash runway into 2027, providing a solid foundation for the company's future operations.
In other recent news, Skye Bioscience Inc. has decided to discontinue its SBI-100 Ophthalmic Emulsion program following an unsuccessful Phase 2a clinical trial. The company's shift in focus is now towards its metabolic program, specifically Nimacimab, which is expected to enter a Phase 2 obesity clinical trial in 2024. This strategic decision is expected to extend Skye Bioscience's cash runway into 2027.
In analyst coverage, Cantor Fitzgerald has initiated an Overweight rating on Skye Bioscience, setting a price target of $21.00 and highlighting the company's promising pipeline. Similarly, Piper Sandler has raised its price target on the company to $20, following progress in Skye Bioscience's Phase IIa study.
In terms of financial developments, Skye Bioscience recently secured $40 million in gross proceeds through a private placement deal. Participating investors included Perceptive Advisors, Velan Capital, Schonfeld Strategic Advisors, and several existing Skye shareholders such as 5AM Ventures, Altium Capital, and Sphera Healthcare. The funds will support the company's upcoming Phase 2 clinical trials for obesity and glaucoma. These are the recent developments surrounding Skye Bioscience Inc.
InvestingPro Insights
In light of recent developments at Skye Bioscience Inc. (NASDAQ:SKYE), investors may find the real-time data and insights from InvestingPro particularly relevant. The company's decision to halt the development of its glaucoma treatment has had a noticeable impact on its stock price, which has experienced significant volatility. According to InvestingPro data, the stock's one-week total return has declined by 8.53%, and the three-month return has decreased by 17.9%. However, looking at a longer timeframe, the six-month total return shows a remarkable surge of 212.57%, underscoring the stock's unpredictable nature.
An InvestingPro Tip highlights that Skye holds more cash than debt on its balance sheet, which may offer some reassurance to investors concerned about the company's financial stability. Despite the challenges, Skye's liquid assets exceed its short-term obligations, suggesting that the company is in a position to manage its immediate financial commitments. On the flip side, Skye is not expected to be profitable this year, and it has not been profitable over the last twelve months, as reflected in a negative return on assets of -75.43%. Additionally, the company does not pay a dividend to shareholders, which may be a consideration for income-focused investors.
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