Skye Bioscience, a micro-cap pharmaceutical company, is making waves in the weight loss drug space with its innovative drug, nimacimab. The company is looking to capitalize on the booming success of GLP-1 agonist drugs like those sold by Eli Lilly and Novo Nordisk, prompting Wall Street analysts to place high expectations on Skye Bioscience. The average price target for Skye’s shares currently sits at over $18, suggesting a potential rise of over 350% from its current trading price. However, reaching these lofty expectations hinges on nimacimab’s ability to overcome several hurdles.
While the popular GLP-1 agonists target a different mechanism, nimacimab acts as a peripheral cannabinoid receptor 1 (CB1) inhibitor. This unique approach offers several potential advantages. Firstly, nimacimab could be used alongside GLP-1s to potentially enhance weight loss or provide an alternative for patients who experience adverse effects from GLP-1s.
Secondly, nimacimab could potentially avoid the common gastrointestinal side effects associated with GLP-1s, such as nausea and vomiting. These side effects, experienced by a significant portion of patients (40% to 85%), often lead to treatment discontinuation within the first year. If nimacimab can mitigate these issues, it could become highly appealing to patients.
Thirdly, nimacimab’s peripheral targeting, designed to avoid entering the brain, is crucial based on the history of CB1 inhibitors. Accomplia, a CB1 drug approved in the European Union for obesity treatment in 2006, was discontinued due to serious side effects including depression and suicidal ideation. Researchers believe these effects were caused by the drug’s access to the brain. Skye believes its peripheral CB1 inhibitor design can prevent these psychiatric risks.
Initial results from nimacimab’s Phase 1 trial for nonalcoholic fatty liver disease showed promising signs regarding side effects, with less than 5% of patients experiencing gastrointestinal issues and no adverse psychiatric effects. The company plans to release interim Phase 2 data for obesity treatment in Q2 2025, followed by final data in Q4 2025. These results will evaluate nimacimab’s effectiveness on its own and in combination with Wegovy, a popular GLP-1 drug.
Recent Phase 2 results for Novo Nordisk’s CB1 drug, monlunabant, showed mild to moderate neuropsychiatric side effects, albeit with a 6.4% weight loss after 16 weeks. Skye considers this positive, as it validates the potential of CB1 drugs for weight loss while highlighting the possible advantages of nimacimab’s peripheral design in reducing these side effects.
Despite these promising aspects, nimacimab faces potential drawbacks. Early data suggest that nimacimab alone might achieve a lower weight loss of around 8% after 26 weeks compared to tirzepatide, a GLP-1 drug, which demonstrated a weight loss between 12% and 16% during the same period. This lower weight loss could impact nimacimab’s sales potential.
Therefore, the results of nimacimab’s combination therapy with Wegovy, particularly in reducing gastrointestinal adverse events, will be crucial for its success. While these results could significantly influence Skye’s stock price, investors must proceed with caution, as only a small percentage of drugs entering FDA trials ultimately gain approval.
