Skye Bioscience Inc (OTCQB:SKYE) and Emerald Health Therapeutics Inc said they have entered into a definitive agreement that will see Skye acquiring Emerald in a share-for-share transaction.
Under the proposed plan of arrangement, Skye will issue Emerald shareholders 1.95 shares of its shares in exchange for each Emerald share, resulting in current Skye stockholders owning approximately 54% of its common stock and former shareholders of Emerald owning approximately 46%. All stock options and warrants of Emerald will be exchanged for replacement options and warrants of Skye on identical terms, it said.
San-Diego-based Skye is developing proprietary, synthetic cannabinoid derivatives to treat glaucoma and other diseases with significant unmet needs. The company noted that Emerald possesses cash and non-cash assets that it would acquire through the arrangement.
READ: Skye Bioscience says study shows enhanced reduction in intraocular pressure with its SBI-100 formulation for glaucoma
"Skye's proposed acquisition of Emerald stands to strengthen its balance sheet and ability to advance its well-positioned technology and development platform that has generated promising preclinical data in the past year and a half,” said Dr Praveen Tyle, chair of the Skye Bioscience board's special committee.
Skye said it possesses patented technology and know-how focused on enabling, enhancing, and clinically validating therapeutic outcomes of uniquely modified and synthetically manufactured cannabinoid-derivative molecules. This outcome has already been shown in preclinical studies that have demonstrated notable advantages of its lead therapeutic drug, SBI-100 Ophthalmic Emulsion, over the established clinical standard of care for treating glaucoma and potentially represents a new and necessary class of therapeutic for the world's leading cause of irreversible blindness.
Through the completion of this transaction, Skye said it expects to have funding for a Phase 2 study it is planning to start in the fourth quarter of 2022, following a Phase 1 study beginning in the second quarter of 2022.
“Despite the constraints of COVID on all facets of the life science industry, Skye has completed the preclinical preparation necessary to launch its first-in-human study of its lead drug, SBI-100 OE, in the second quarter of 2022,” Tyle added. “We expect regulatory approval to start our Phase 1 study and begin enrolling patients shortly. The transaction with Emerald is expected to provide funding into 2023 and, importantly, for our planned Phase 2 study starting in the fourth quarter of 2022.”
Emerald said combining with Skye presents its shareholders with “an excellent opportunity” to potentially benefit from a new class of cannabinoid-derivative drug candidates.
“Since announcing the strategic pivot of Emerald last November, we have been working to wind down our past operations, monetize our non-cash assets, and apply our capital to a new investment opportunity,” Bobby Rai, chair of the Emerald Health Therapeutics board’s special committee said. “We have searched for a company with differentiated positioning and a pedigree of expertise and experience. We believe we have found it in Skye Bioscience.”
Skye noted that the boards of directors of both companies have unanimously approved the arrangement and recommended that their respective shareholders also vote in favor.
Apart from shareholder approval, the proposed arrangement is subject to approval by the Supreme Court of British Columbia, Canada.
Skye Bioscience is a pharmaceutical company unlocking the potential of cannabinoids through the development of its proprietary cannabinoid derivatives to treat diseases with significant unmet need.
The company's lead program, SBI-100, is focused on treating glaucoma, a disease with no cure and the world's leading cause of irreversible blindness.
Contact the author at stephen.gunnion@proactiveinvestors.com