UPDATE 3-Skye's obesity drug misses mid-stage trial main goal, shares tank

(Updates shares, adds analyst comment in paragraph 5, CEO comment in paragraph 7) By Mariam Sunny and Padmanabhan Ananthan Oct 6 (Reuters) – Skye Bioscience's experimental treatment failed to achieve the main goal of significantly reducing weight in adults with obesity in a mid-stage study, sending its shares down over 60% on Monday. Patients receiving the drug, nimacimab, lost 1.26% of their body weight, when adjusted for placebo rates, lower than the company's expectations of a 5% to 8% reduction. Skye has been banking on nimacimab, a weekly subcutaneous injection, to fuel growth after the company stopped developing its eye disease drug candidate following its failure in a mid-stage study last year. Nimacimab is designed to block the CB1 protein that aids in breaking down stored fat and regulating appetite-related hormones, which can help in sustained weight reduction without loss of muscle. "While we are still intrigued by Skye's targeting approach of CB1, the bottom line is we aren't convinced yet from the data reported today," Cantor analyst Kristen Kluska said, adding that it will remain a "show me story" if higher doses can lead to enough weight loss to be competitive. Skye said no neuropsychiatric issues historically associated with this class of drugs were observed with nimacimab in the study. "We have a solution on addressing the safety concern that's kind of plagued the mechanism up until now," CEO Punit Dhillon told Reuters. The 136-patient study also tested nimacimab in combination with Novo Nordisk's Wegovy, which showed that patients who took the combination lost 13.2% of their body weight on average, compared with 10.25% for those on Wegovy alone after 26 weeks. The combination also helped patients preserve more lean mass compared with semaglutide alone, it said. Roughly a dozen companies, including Eli Lilly and smaller rival Scholar Rock are testing treatments that target proteins tied to muscle preservation or growth. These treatments, being tested in combination with Novo and Lilly's drugs, could generate more than $30 billion in sales by 2035. (Reporting by Padmanabhan Ananthan and Mariam Sunny in Bengaluru; additional reporting by Bhanvi Satija in London; Editing by Sriraj Kalluvila and Shilpi Majumdar)

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