Skye acquires Bird Rock Bio, weeks after Novo Nordisk says it will buy a CB1 developer

Skye Bioscience acquired Bird Rock Bio to get its hands on an asset targeting CB1 just two weeks after Novo Nordisk dipped its toes into the once-hot space to buy Inversago Pharma, another developer of CB1 therapies.

The San Diego biotech said Monday morning it acquired Bird Rock’s outstanding stock for total consideration of about $20 million. Bird Rock, a Versant Ventures- and 5AM-backed startup, had said little in the three years since announcing a Phase II IND application for its CB1 antibody nimacimab for various renal diseases.

Now, those two venture capital firms, as well as an undisclosed investor, are giving the company $12 million via a private investment in public equity, or PIPE. Bird Rock’s investors and the PIPE backers together own 68.4% of Skye, with Skye’s equity holders now owning about 31.6%.

Skye also picked up money via a short-term convertible note. Together, it amounts to about $17 million for Skye, about $9 million of which is being 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.”

The financing is now expected to take Skye “into 2024,” the biotech said Monday. It’s expected to fund a Phase I data readout for its CB1 agonist/activator SBI-100 by the end of September and an interim Phase IIa data drop for the same asset in glaucoma in the first half of next year. Skye also anticipates a Phase II basket study for the Bird Rock asset will start next year, testing its potential in chronic kidney disease.

The cannabinoid 1 receptor was a hot target in the mid-2000s, with Sanofi’s Acomplia making it to market in Europe. But cases of anxiety and depression sidelined the drug, and it was pulled from the market. Merck, AstraZeneca, Solvay and a host of other biopharmas were working on potential obesity drugs that went after CB1, but they scrapped those plans.

Bird Rock, Inversago and other CB1-targeting biotechs hope to avoid the safety concerns that previously plagued the class. The new generation of therapies aims to restrict or severely limit entry into the brain so there’s no off-putting activity.

Paul Grayson

“Prior pre-clinical and clinical data demonstrated positive safety and tolerability of nimacimab,” Paul Grayson, Bird Rock CEO and Versant venture partner,said in a statement. “There have been no observed effects on the central nervous system, which has been a challenge with certain other CB1-inhibitors.”

Grayson joined the Skye board as part of the deal. He’s also the CEO of Tentarix Biotherapeutics.

Johnson & Johnson’s Janssen had secured the option to buy Bird Rock Bio in early 2017 but decided not to after looking at the Phase I data for nimacimab.

Skye, which currently trades on an over-the-counter stock market, also hopes to uplist to a national stock exchange, CEO Punit Dhillon said in a statement. The company disclosed a proposed 1:250 reverse stock split.

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