Skye Bioscience faces October 2026 retrial of Cunning whistleblower suit

Skye Bioscience, Inc. (Nasdaq: SKYE) is heading to a retrial of a whistleblower and wrongful termination lawsuit brought by a former employee, Wendy Cunning, according to its 10-Q filed August 14, 2026. The case, Wendy Cunning vs Skye Bioscience, Inc., is in the U.S. District Court for the Central District of California. The 10-Q says the new trial "is currently scheduled to be held in October 2026." Skye is the only defendant the filings name.

A jury found for Cunning in January 2023, but the Ninth Circuit vacated the judgment on October 22, 2024 and sent the case back for a new trial. The 10-Q gives no case number or filing date. Skye's preliminary proxy statement filed October 28, 2026 still lists the case as unresolved.

The case

Cunning alleges, among other things, wrongful termination, violation of whistleblower protections under the Sarbanes-Oxley Act of 2002, and retaliation under California law. The complaint concerns actions and events during her employment, from March 2018 to July 2019, under Skye's former management. It seeks unspecified economic and non-economic losses and attorneys' fees.

On January 18, 2023 a jury awarded Cunning $512,500 in economic damages, $840,960 in non-economic damages and $3,500,000 in punitive damages. On August 2, 2023 the court awarded her $1,200,008 in attorneys' fees. Skye appealed in March 2023 and, on August 17, 2023, obtained a stay of enforcement by posting an appeal bond of $9,080,202.

Defendants

Skye Bioscience, Inc. is the defendant. The 10-Q names no individual defendant, and it refers only to Skye's former management without naming anyone. Skye also faces a securities class action and two derivative suits over nimacimab. The 10-Q describes them as separate matters.

Where it stands

The Ninth Circuit ruled for Skye on October 22, 2024, vacated the judgment and remanded the case to the district court for a new trial. Skye recovered the $9,080,202 restriction on its cash tied to the bond during 2024. The 10-Q puts the new trial in October 2026. Skye's October 28 preliminary proxy does not report a verdict, a settlement or a trial date.

In 2024 Skye reversed accrued interest on the original judgment and recognized a gain of $4,234,717. During the first six months of 2026 it reassessed its estimate for the case. It cited developments including ongoing settlement discussions, the approaching retrial, and updated assessments of potential damages and litigation risk. The increase led it to recognize a $3,250,000 change in estimate for legal contingencies. The 10-Q also says the second quarter change in estimate reflects changes after June 30, 2026 in the facts and circumstances of its legal proceedings. At June 30, 2026 the estimate, including accrued legal expenses, was $5,417,250.

Why it matters to shareholders

Skye says the final amount of the loss and of any loss recoveries remains uncertain. The potential loss may be significantly more or less than the revised estimate, and it is at least reasonably possible that the estimate will change in the near term. It adds that there is no guarantee it will succeed in recovering additional losses.

The preliminary proxy for Skye's proposed acquisition of Redx Pharma Limited says the outcome remains uncertain, that the case could require payment of significant monetary damages, and that it has diverted management's attention and resources. In evaluating the estimate, management weighed advice from outside advisers, the damages and fee awards possible at a retrial, the likelihood of settlement, Skye's possible defenses and counterclaims, and the procedural posture, including the earlier judgment amount.

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