Skye Bioscience Enters ELOC and Warrant Agreement with Redmile Affiliate

What Happened
Skye Bioscience, Inc. announced on Aug. 21, 2026 that it entered a Securities Purchase Agreement with Redmile Biopharma Investments III, L.P. to establish an equity line of credit (ELOC) for up to $22.0 million (subject to reduction based on PIPE proceeds) and to issue a warrant with an economic value of $5.0 million (calculated using the PIPE Price) in connection with Skye’s previously announced transaction to acquire Redx Pharma. The arrangements follow a binding term sheet dated Aug. 14, 2026 and are subject to the closing of the PIPE financing and other conditions in the related Transaction Agreement.

Key Details

• ELOC size: up to $22,000,000 aggregate, reduced by the amount the PIPE’s funded proceeds exceed $103,000,000; if funded PIPE ≥ $125,000,000, no ELOC purchases are required.
• Purchase mechanics: ELOC purchases may occur monthly over up to three years beginning at the Commencement Date, with a $2,000,000-per-month cap and an aggregate cap that cannot exceed 19.99% of outstanding common shares unless stockholder approval is obtained.
• Pricing/floors: ELOC purchase price per share = lesser of PIPE Price or Market Price on notice date, but not below a 10% discount to the PIPE Price.
• Warrant: issued at closing to buy shares equal to $5,000,000 divided by PIPE Price; exercisable 1/1/2027–1/1/2030; exercise price = lesser of PIPE Price or Market Price on exercise date, but not below 90% of PIPE Price. Warrant exercises for common stock are subject to a 9.99% beneficial ownership limit (excess converts to non-voting shares).
• Registration: Skye must file a resale registration statement for ELOC common shares and conversion shares within 10 business days of the PIPE Closing Date and use best efforts to cause it to become effective within stated deadlines.

Why It Matters
For investors, this agreement provides Skye a contingent financing backstop (up to $22M) to support the company around the proposed Redx acquisition and related PIPE financing, while also creating potential dilution through future share issuances and warrant exercises. Protections in the deal—beneficial ownership limits, a 19.99% aggregate cap (subject to shareholder approval), and minimum pricing floors—limit how cheaply and how much stock can be issued without further approvals. The registration rights mean resale of shares issued under the ELOC will be possible once the registration statement is effective. Overall, the deal is a financing tool tied to the PIPE and the proposed acquisition; its material effects on ownership and dilution will depend on the PIPE funding level and the degree to which the ELOC and warrant are exercised.