Core Viewpoint - Conduit Pharmaceuticals Inc. has announced a 1-for-100 reverse stock split to comply with Nasdaq's minimum bid price requirement and enhance the stock's marketability [1][2]. Group 1: Reverse Stock Split Details - The reverse stock split will take effect on January 24, 2025, at 5:00 PM Eastern Time, with trading on a reverse-adjusted basis starting January 27, 2025 [2]. - Every 100 shares of common stock will be combined into one share, resulting in approximately 1.5 million outstanding shares post-split [3][4]. - The par value per share remains unchanged at $0.0001, and adjustments will be made to equity awards and convertible securities accordingly [3]. Group 2: Trading and Administrative Aspects - The common stock will continue to trade under the ticker symbol "CDT" with a new CUSIP number of 20678X205 after the reverse stock split [4]. - No fractional shares will be issued; stockholders entitled to fractional shares will receive a proportional cash payment [4]. - VStock Transfer, LLC will act as the exchange agent, and registered stockholders will not need to take action to receive post-split shares [5]. Group 3: Company Overview - Conduit Pharmaceuticals is a clinical stage, disease-agnostic life science company focused on efficient compound development, acquiring and funding Phase 2-ready assets [7]. - The company aims to exit through third-party license deals following successful clinical trials, differing from traditional pharma/biotech models [7].

Core Insights - Conduit Pharmaceuticals has entered into a strategic services agreement with Agility Life Sciences to develop new solid oral-dosage form products for its autoimmune pipeline, aimed at future clinical trials [1][2] Group 1: Company Overview - Conduit Pharmaceuticals is a multi-asset, clinical stage, disease-agnostic life science company focused on acquiring and funding Phase 2-ready assets, seeking exits through third-party licensing deals after successful clinical trials [5] - Agility Life Sciences is an award-winning formulation development CDMO that specializes in creating smart formulations to enhance the probability of success in pre-clinical studies [4] Group 2: Strategic Collaboration - The collaboration with Agility will leverage Conduit's proprietary solid forms, protected by newly established composition-of-matter intellectual property, to develop enhanced oral dosage forms tailored to patient preferences and disease-specific needs [2][3] - Conduit’s pipeline includes candidates with clinically tested oral formulations, allowing for efficient advancement into Phase 2 trials using existing data packages [3] Group 3: Market Positioning - The dual-track approach of developing enhanced proprietary oral dosage formulations while conducting ongoing clinical trials is intended to strengthen market protection, enhance market value, and optimize positioning for future licensing opportunities [3]

Core Insights - Conduit Pharmaceuticals has partnered with SARBORG Limited to utilize artificial intelligence and cybernetics for enhancing drug development processes, including drug repurposing, discovery, and clinical trial monitoring [1][2][3] Group 1: Partnership Details - The agreement with SARBORG aims to address challenges in the pharmaceutical sector by reducing human error in decision-making processes related to clinical development and asset identification [3][4] - Conduit will gain access to advanced predictive models and dashboards, which will facilitate the evaluation of drug candidates and streamline clinical trials [4][5] Group 2: Strategic Advantages - By integrating SARBORG's AI and cybernetics technology, Conduit aims to enhance efficiency, lower costs, and accelerate timelines in drug development [3][6] - The partnership is expected to provide Conduit with a strategic advantage, allowing for quicker and more accurate identification of opportunities in the market [7] Group 3: Long-term Vision - Conduit retains a perpetual, non-exclusive, royalty-free right to use any technology developed by SARBORG, ensuring ongoing support and innovation in areas such as intellectual property creation and regulatory strategy [5][6] - The collaboration reinforces Conduit's commitment to leveraging AI-driven solutions to maintain a competitive edge in the pharmaceutical industry [6]

Core Insights - Conduit Pharmaceuticals has received approval from the Japan Patent Office for a composition of matter patent for its lead asset, AZD1656, which targets autoimmune disorders [1][2] - This patent approval follows a similar grant in Australia, indicating the company's ongoing efforts to protect its intellectual property and enhance out-licensing opportunities [1][2] Company Overview - Conduit Pharmaceuticals operates with a unique business model aimed at addressing unmet medical needs by enhancing the intellectual property of its assets through advanced solid-form technology [3] - The company holds exclusive licenses with AstraZeneca for AZD1656, AZD5658, and AZD5904, and has additional cocrystal assets, including CDT1656, which expands its innovative portfolio [4] - The primary indications targeted by Conduit are Lupus and ANCA Vasculitis [4] Leadership - The company is led by a team of experienced pharmaceutical executives, including CEO Dr. David Tapolczay and Chair Dr. Freda Lewis-Hall, both of whom have significant backgrounds in the industry [5]

Conduit Pharmaceuticals strengthens its Board of Directors with the addition of Simon Fry, a seasoned investment banking executive with over 30 years of experience in asset management, capital markets, and strategy development. NAPLES, Fla. and CAMBRIDGE, United Kingdom, Nov. 19, 2024 (GLOBE NEWSWIRE) -- Conduit Pharmaceuticals Inc. (Nasdaq: CDT) (“Conduit” or the “Company”), a multi-asset, clinical stage, disease-agnostic life science company delivering an efficient model for compound development, today an ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-41245 CONDUIT PHARMACEUTICALS INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | |------------- ...

Core Viewpoint - Conduit Pharmaceuticals has announced the addition of a new asset, CDT1656, to its autoimmune pipeline, supported by a composition of matter patent filing, which aims to strengthen its competitive position in the market [1][2][5]. Company Developments - CDT1656 combines AZD1656, a glucokinase activator licensed from AstraZeneca, with a second compound that has shown immune-modulating effects across various autoimmune conditions, enhancing its therapeutic potential [1][2]. - The new patent filings reflect Conduit's commitment to building a valuable Intellectual Property (IP) portfolio, particularly with assets that can be combined with existing therapies to offer enhanced treatment solutions [3][5]. - Conduit aims to create additional IP combinations to maximize future licensing value and strategically position itself to capture market share for products with expiring patents or IP vulnerabilities [3][5]. Market Opportunity - The autoimmune disease therapeutics market was estimated at $214.54 billion in 2024 and is projected to grow at a compound annual growth rate of 7.90%, reaching $339.00 billion by 2030, indicating significant market opportunities for CDT1656 [4]. - The development of CDT1656 is expected to expand Conduit's market opportunity across a broader range of autoimmune conditions and patient subsets, further strengthening its strategic position [2][4]. Strategic Vision - Conduit Pharmaceuticals operates as a multi-asset, clinical stage, disease-agnostic life science company, focusing on an efficient model for compound development and seeking exits through third-party license deals following successful clinical trials [6].

SAN DIEGO and LONDON, Nov. 01, 2024 (GLOBE NEWSWIRE) -- Conduit Pharmaceuticals Inc. (Nasdaq: CDT) (“Conduit” or the “Company”), today announced the restructuring of a portion of its financial obligations, enhancing its balance sheet and liquidity. The Company has restructured the $2.65 million loan note with Nirland Limited (“Nirland”) and secured $1.2 million in new promissory notes through separate agreements with third parties. Conduit entered into a $2.65 million loan note with Nirland on August 6, 202 ...

Group 1 - Conduit Pharmaceuticals (NASDAQ:CDT) stock experienced an increase following a shareholder update revealing that Nirland Limited holds a 14.8% stake in the company [1][2] - Nirland Limited's stake consists of 12.5 million shares and warrants for an additional 2 million shares, based on the company's outstanding shares of 98,004,699 [2] - The stake was acquired through a Senior Secured Promissory Note as part of Conduit Pharmaceuticals' merger agreement with Murphy Canyon Acquisition Corp [2] Group 2 - Following the news, CDT stock saw heavy trading with over 72 million shares changing hands, significantly higher than the daily average of about 10 million shares [3] - As of Wednesday morning, CDT stock rose by 11.7%, although it remains down 96.7% since the beginning of the year [3]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) The unaudited financial statements reveal a significant increase in net loss and cash usage, with detailed notes on operations and liquidity concerns [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant decline in assets and a substantial increase in stockholders' deficit as of June 30, 2024 | Metric (in thousands) | June 30, 2024 (unaudited) | December 31, 2023 (audited) | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $219 | $4,228 | | Marketable Investments | $214 | $- | | Total current assets | $1,601 | $5,733 | | Total assets | $3,305 | $7,224 | | **LIABILITIES AND STOCKHOLDERS' DEFICIT** | | | | Accounts payable | $1,064 | $215 | | Total current liabilities | $2,856 | $1,801 | | Total liabilities | $8,767 | $7,681 | | Total stockholders' deficit | $(5,462) | $(457) | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company's net loss more than doubled for the six months ended June 30, 2024, driven by increased operating and other expenses | Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $25 | $- | $153 | $- | | General and administrative expenses | $3,115 | $1,315 | $5,942 | $2,830 | | Total operating expenses | $3,140 | $1,315 | $6,095 | $2,830 | | Operating loss | $(3,140) | $(1,315) | $(6,095) | $(2,830) | | Other income (expense), net | $(2,126) | $(791) | $(2,613) | $(948) | | Net loss | $(5,383) | $(2,106) | $(8,935) | $(3,778) | | Basic earnings/(net loss) per share | $(0.07) | $(0.03) | $(0.12) | $(0.06) | | Diluted earnings/(net loss) per share | $(0.07) | $(0.03) | $(0.12) | $(0.05) | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Deficit) Stockholders' deficit increased significantly during the period, primarily driven by the net loss incurred | Metric (in thousands) | Balance at April 1, 2024 | Balance at June 30, 2024 | | :--- | :--- | :--- | | Common stock (shares) | 73,829,536 | 74,000,234 | | Additional paid-in capital | $11,358 | $14,378 | | Accumulated deficit | $(14,851) | $(20,234) | | Total stockholders' deficit | $(3,098) | $(5,462) | - The accumulated deficit significantly increased from **$(11,299) thousand** at January 1, 2024, to **$(20,234) thousand** at June 30, 2024, primarily due to the net loss incurred during the period[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Cash used in operating activities increased while cash from financing activities decreased sharply, resulting in a net cash decline | Metric (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash flows used in operating activities | $(3,870) | $(2,398) | | Net cash flows used in investing activities | $(224) | $161 | | Net cash flows provided by financing activities | $113 | $2,231 | | Net change in cash | $(4,009) | $- | | Cash and cash equivalents at end of period | $219 | $- | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=1.%20Nature%20of%20the%20Business%2C%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) The company operates a 'conduit' model for clinical-stage assets and faces substantial doubt about its ability to continue as a going concern - Conduit Pharmaceuticals Inc. operates as a clinical-stage specialty biopharmaceutical company, utilizing a 'conduit' business model to develop and commercialize clinical assets from pharmaceutical companies[13](index=13&type=chunk) - The company's current development pipeline includes two HK-4 Glucokinase Activators (Phase 2 ready for autoimmune disorders) and a potent, irreversible inhibitor of human Myeloperoxidase (MPO) for idiopathic male infertility, following a recent License Agreement with AstraZeneca AB (PUBL)[14](index=14&type=chunk) - As of June 30, 2024, the company had an accumulated deficit of **$20.2 million** and cash and cash equivalents of **$0.2 million**, with net losses of **$8.9 million** and cash used in operating activities of **$3.9 million** for the six months ended June 30, 2024, raising substantial doubt about its ability to continue as a going concern[20](index=20&type=chunk) - The company received a notice on May 28, 2024, regarding non-compliance with Nasdaq's independent audit committee requirements and another on August 12, 2024, for failing to meet the minimum **$1.00 bid price** requirement, with a compliance deadline of February 10, 2025[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [2. Revision of Previously Issued Financials](index=18&type=section&id=2.%20Revision%20of%20Previously%20Issued%20Financials) The company restated its Q2 2023 financials to correct the accounting treatment of merger-related expenses, reclassifying them from expenses to equity - The company restated its Q2 2023 financial statements to correct errors where certain merger-related expenses were incorrectly expensed instead of being capitalized and recorded against equity[48](index=48&type=chunk) | Metric (in thousands) | Previously Reported (June 30, 2023) | Adjustment | Restated (June 30, 2023) | | :--- | :--- | :--- | :--- | | Prepaid expenses and other current assets | $- | $895 | $895 | | Total current assets | $- | $895 | $895 | | Total assets | $5 | $895 | $900 | | Accumulated deficit | $(15,437) | $895 | $(14,542) | | Total shareholders' deficit | $(15,408) | $895 | $(14,513) | | Metric (in thousands) | Previously Reported (6 Months Ended June 30, 2023) | Adjustment | Restated (6 Months Ended June 30, 2023) | | :--- | :--- | :--- | :--- | | General and administrative expenses | $3,725 | $(895) | $2,830 | | Operating loss | $(3,725) | $895 | $(2,830) | | Net income (loss) | $(4,673) | $895 | $(3,778) | | Total comprehensive income (loss) | $(5,319) | $895 | $(4,424) | [3. Merger](index=21&type=section&id=3.%20Merger) The merger with MURF was completed in September 2023 as a reverse recapitalization, raising net proceeds of $8.5 million from PIPE financing - The merger between Conduit Pharmaceuticals Limited and MURF was completed on September 22, 2023, and accounted for as a reverse recapitalization[16](index=16&type=chunk)[55](index=55&type=chunk) - A total of **72,418,316 shares** of Conduit Pharmaceuticals Inc. common stock were issued as a result of the merger, PIPE financing, and to advisors[59](index=59&type=chunk) - The PIPE Financing, which closed with the merger, raised **$20.0 million** in cash, with net proceeds to the company of **$8.5 million** after transaction costs[58](index=58&type=chunk) [4. Marketable Investments](index=22&type=section&id=4.%20Marketable%20Investments) The company held $214 thousand in marketable trading securities as of June 30, 2024, with no such investments in the prior year | Metric (in thousands) | June 30, 2024 | | :--- | :--- | | Investment in trading securities | $214 | | Total available-for-sale, short-term investments | $214 | - The company had no short-term investments as of December 31, 2023[60](index=60&type=chunk) [5. Fair Value](index=23&type=section&id=5.%20Fair%20Value) The company measures certain liabilities at fair value, with derivative warrant liabilities classified as Level 2 and trading securities as Level 3 | Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Derivative warrant Liability | $32 | $142 | | Investment in trading securities | $214 | $- | - Derivative warrant liabilities are classified as **Level 2** fair value measurements, utilizing observable market quotes for publicly traded warrants[64](index=64&type=chunk) - The fair value of the investment in trading securities is classified as a **Level 3** fair value measurement, based on purchase price[63](index=63&type=chunk) [6. Balance Sheet Details](index=23&type=section&id=6.%20Balance%20Sheet%20Details) Prepaid expenses decreased while accrued expenses increased, driven by changes in insurance, interest, and professional fees | Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Prepaid expenses and other current assets | $1,168 | $1,505 | | Accrued Professional Fees | $141 | $361 | | Accrued Interest | $289 | $87 | | Total accrued expenses and other current liabilities | $665 | $601 | [7. Convertible Notes Payable](index=25&type=section&id=7.%20Convertible%20Notes%20Payable) Most convertible notes converted to common stock upon the merger, with one $0.8 million note remaining outstanding - All outstanding convertible notes issued under the 2021 and 2022 Convertible Loan Instruments converted into **373,570 shares** of Common Stock upon the closing of the Merger on September 22, 2023[69](index=69&type=chunk) - A convertible promissory note payable of **$0.8 million**, issued in March 2023, remains unconverted as of June 30, 2024. It carries a **20% interest rate** and matures 18 months from issuance[71](index=71&type=chunk) | Metric (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Interest expense on convertible promissory note | $80 | $40 | [8. Loans Payable](index=25&type=section&id=8.%20Loans%20Payable) The company had $0.2 million in non-interest-bearing loans payable which matured in May 2024 - The company had **$0.2 million** in non-interest-bearing loans payable as of June 30, 2024, which matured two years from their May 1, 2022, issuance date[72](index=72&type=chunk) [9. Deferred Commission Payable](index=26&type=section&id=9.%20Deferred%20Commission%20Payable) A deferred commission of $5.7 million plus interest is payable to a financial advisor by March 2025 - A deferred commission payable of **$5.7 million** to A.G.P. (financial advisor for the Merger) is recorded as a non-current liability, bearing **5.5% annual interest** and due by March 21, 2025[73](index=73&type=chunk) | Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Accrued interest on deferred commission | $200 | $100 | [10. Share Based Compensation](index=26&type=section&id=10.%20Share%20Based%20Compensation) The company recognized $0.9 million in stock-based compensation expense for the six months ended June 30, 2024 - The 2023 Stock Incentive Plan had **14,107,834 shares** of Common Stock available for issuance as of June 30, 2024, an increase from 11,497,622 shares due to an 'evergreen' provision[74](index=74&type=chunk) - As of June 30, 2024, the total compensation cost related to non-vested option awards not yet recognized was **$3.1 million**, with a weighted average remaining vesting period of 3.0 years[81](index=81&type=chunk) | Metric (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Stock-based compensation expense | $500 | $900 | [11. Income Taxes](index=28&type=section&id=11.%20Income%20Taxes) The company's effective tax rate was 0.0% due to current year tax losses and a valuation allowance against deferred tax assets - The company's effective tax rate was **0.0%** for the six months ended June 30, 2024, and 2023, due to current year tax losses and a valuation allowance against net deferred tax assets[82](index=82&type=chunk) [12. Earnings/(Net Loss) Per Share Attributable to Common Stockholders](index=29&type=section&id=12.%20Earnings%2F%28Net%20Loss%29%20Per%20Share%20Attributable%20to%20Common%20Stockholders) Net loss per share was $(0.12) for the six months ended June 30, 2024, with over 37 million potentially dilutive securities excluded | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss - basic | $(5,383) | $(8,935) | | Basic weighted-average common shares outstanding | 73,851,440 | 73,840,488 | | Net loss per share attributable to common stockholders, basic | $(0.07) | $(0.12) | | Net income loss per share attributable to common stockholders, diluted | $(0.07) | $(0.12) | - As of June 30, 2024, **37,313,944** potentially dilutive securities (including warrants and convertible notes) were excluded from diluted EPS calculations because they were anti-dilutive[85](index=85&type=chunk) [13. Related Party Transactions](index=30&type=section&id=13.%20Related%20Party%20Transactions) The company has significant transactions with related parties, including Corvus Capital Limited and St George Street Capital - Corvus Capital Limited is a significant investor, and its CEO is a member of Conduit's Board[86](index=86&type=chunk) - For the six months ended June 30, 2024, the company incurred approximately **$0.3 million** in travel expenses on behalf of the CEO of Corvus[87](index=87&type=chunk) - A **$0.6 million** loan agreement with St George Street Capital (SGSC) was repaid or forgiven on September 22, 2023[91](index=91&type=chunk) [14. Other Income (expense), net](index=31&type=section&id=14.%20Other%20Income%20%28expense%29%2C%20net) Other expenses increased significantly due to costs associated with issuing warrants for lock-up agreements | Metric (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total other expense, net | $(2,243) | $(2,840) | | Issuance of Warrants for lock up (expense) | $2,208 | $2,710 | - The increase in other expense, net, was primarily driven by a **$2.2 million** expense for the three months and **$2.7 million** for the six months ended June 30, 2024, related to the issuance of warrants for lock-up agreements[93](index=93&type=chunk) [15. Warrants](index=31&type=section&id=15.%20Warrants) The company has both equity-classified and liability-classified warrants, with new warrants issued in 2024 for lock-up agreements - Publicly Traded Warrants and Private Placement Warrants are classified as equity, while PIPE Warrants and A.G.P. Warrants are classified as derivative liabilities and remeasured at fair value[95](index=95&type=chunk)[111](index=111&type=chunk) - In March and April 2024, the company issued equity-classified common stock purchase warrants (March 2024 Warrants and April 2024 Warrants) in private placements for lock-up agreements[97](index=97&type=chunk)[98](index=98&type=chunk) - The March 2024 and April 2024 Warrants are not exercisable until one year after their issuance date and have a two-year exercisability period thereafter[107](index=107&type=chunk)[108](index=108&type=chunk) [16. Commitments and Contingencies](index=34&type=section&id=16.%20Commitments%20and%20Contingencies) The company is involved in a legal dispute over advisory fees and entered into a new office lease agreement in Cambridge, England - Strand Hanson Limited filed a claim against the company in September 2023, seeking **$2 million** and **6.5 million shares** of common stock for alleged advisory fees, which the company disputes[113](index=113&type=chunk) - In March 2024, the company entered into a lease agreement for approximately 2,100 square feet of space in Cambridge, England, for a term ending in January 2027[115](index=115&type=chunk) - The new lease resulted in a right-of-use asset of **$0.4 million** and a corresponding lease liability of **$0.3 million** as of June 30, 2024[115](index=115&type=chunk) [17. Subsequent Events](index=36&type=section&id=17.%20Subsequent%20Events) Post-quarter end, the company entered a significant licensing agreement with AstraZeneca and secured new debt financing - On August 7, 2024, the company entered into a License Agreement with AstraZeneca, granting exclusive rights to HK-4 Glucokinase activators (AZD1656, AZD5658) and a myeloperoxidase inhibitor (AZD5904)[116](index=116&type=chunk) - As consideration for the AstraZeneca license, the company issued **9,504,465 shares** of common stock to AstraZeneca and made an upfront payment of **$1.5 million**[117](index=117&type=chunk)[119](index=119&type=chunk) - On August 5, 2024, the company issued a Senior Secured Promissory Note to Nirland Limited for **$2.65 million** (including a $0.5 million original issuance discount), bearing **12% interest**, maturing in 12 months, and issued Nirland **12,500,000 shares** of common stock[120](index=120&type=chunk)[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's 'conduit' business model, rising expenses, and going concern issues, emphasizing the need for new financing [Overview](index=37&type=section&id=Overview) The company operates a 'conduit' model to develop and commercialize clinical assets, including proprietary and licensed compounds from AstraZeneca - Conduit's business model involves acting as a 'conduit' to develop and commercialize clinical assets from pharmaceutical companies, addressing unmet medical needs and extending intellectual property through solid-form technology[123](index=123&type=chunk) - The company's proprietary intellectual property portfolio includes a 20-year patent-pending AZD1656 Cocrystal (HK-4 Glucokinase Activator) targeting autoimmune diseases[124](index=124&type=chunk) - Conduit has licensed HK-4 Glucokinase activators (AZD1656, AZD5658) and a myeloperoxidase inhibitor (AZD5904) from AstraZeneca for development and commercialization, leveraging AstraZeneca's initial preclinical and clinical data[127](index=127&type=chunk)[129](index=129&type=chunk) [Key Component of Result of Operations](index=38&type=section&id=Key%20Component%20of%20Result%20of%20Operations) Key operational costs include R&D, G&A, and other expenses, with G&A expected to increase significantly as a public company - Research and development expenses are expensed as incurred and primarily focus on developing co-crystals of AZD1656 to increase patent life[131](index=131&type=chunk)[132](index=132&type=chunk) - General and administrative expenses are expected to increase substantially due to operating as a public company, increasing administrative headcount, and advancing clinical assets[135](index=135&type=chunk) - Other income (expenses), net, includes changes in fair value of options and convertible notes, and expenses incurred upon the issuance of warrants[136](index=136&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) The company's net loss increased significantly due to higher R&D, G&A, interest, and other expenses related to warrant issuances | Metric (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $25 | $- | $25 | 100% | | General and administrative expenses | $3,115 | $1,315 | $1,800 | 137% | | Other income (expense), net | $(2,126) | $(791) | $(1,335) | 169% | | Interest expense, net | $(119) | $- | $(119) | -100% | | Net loss | $(5,383) | $(2,106) | $(3,277) | 156% | | Metric (in thousands) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $153 | $- | $153 | 100% | | General and administrative expenses | $5,942 | $2,830 | $3,112 | 110% | | Other income (expense), net | $(2,613) | $(948) | $(1,665) | 176% | | Interest expense, net | $(238) | $- | $(238) | -100% | | Net loss | $(8,935) | $(3,778) | $(5,157) | 137% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces substantial going concern doubt, requiring approximately $17.1 million for working capital over the next 12 months - The company has incurred net losses of **$8.9 million** and **$3.8 million** for the six months ended June 30, 2024 and 2023, respectively, and expects to incur additional losses, raising substantial doubt about its ability to continue as a going concern[146](index=146&type=chunk) - The company anticipates needing approximately **$17.1 million** for working capital over the next 12 months, including **$5.7 million** in deferred financing fees payable[150](index=150&type=chunk) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash (used in) operating activities | $(3,870) | $(2,398) | | Net cash (used in) provided by investing activities | $(224) | $161 | | Net cash provided by financing activities | $113 | $2,231 | | Net (decrease) increase in cash | $(4,009) | $0 | [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) Critical estimates include fair value measurements, warrant classification, and share-based compensation, with the company operating as an emerging growth company - Fair value measurements are categorized into a three-level hierarchy (Level 1, 2, 3) based on the observability of inputs, with Level 3 requiring significant judgment[158](index=158&type=chunk)[160](index=160&type=chunk) - Warrants are classified as either liability or equity based on ASC 480 and ASC 815-40, with liability-classified warrants remeasured at fair value each period[161](index=161&type=chunk)[162](index=162&type=chunk) - The company is an emerging growth company and a smaller reporting company, which allows it to use an extended transition period for complying with new or revised financial accounting standards and to take advantage of scaled disclosures[165](index=165&type=chunk)[168](index=168&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, the company is not required to provide disclosures about market risk - As a smaller reporting company, Conduit Pharmaceuticals Inc. is exempt from providing quantitative and qualitative disclosures about market risk[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls were deemed not effective due to un-remediated material weaknesses, and a new Interim CFO was appointed - The company's disclosure controls and procedures were deemed **not effective** as of June 30, 2024, due to un-remediated material weaknesses[170](index=170&type=chunk) - There have been no changes in internal control over financial reporting during the most recent fiscal quarter[171](index=171&type=chunk) - Adam Sragovicz resigned as Chief Financial Officer effective May 15, 2024, and James Bligh was appointed as Interim Chief Financial Officer[171](index=171&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings.) There were no material developments in the previously disclosed legal proceeding with Strand Hanson Limited during the quarter - No material developments occurred in the previously disclosed legal proceeding during the quarter ended June 30, 2024[171](index=171&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors.) As a smaller reporting company, the company is not required to provide updates to its previously disclosed risk factors - As a smaller reporting company, the company is not required to provide disclosure regarding material changes to its previously disclosed risk factors[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company issued unregistered warrants and shares for lock-up agreements and marketing services under exemptions from registration - On April 22, 2024, the company issued **907,725 unregistered common stock purchase warrants** (April Warrants) to third parties, including directors, in exchange for lock-up agreements and $0.125 per warrant for directors[172](index=172&type=chunk) - On June 24, 2024, the company issued **96,154 unregistered shares** of common stock (Service Shares), valued at $150,000, for marketing services[173](index=173&type=chunk) - Both the April Warrants and Service Shares issuances were made in reliance on exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933 and/or Regulation D[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company's business operations - Mine Safety Disclosures are not applicable to the company[173](index=173&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information.) The company received a Nasdaq deficiency notice for its stock price falling below the $1.00 minimum bid requirement - No executive officers or directors adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2024[174](index=174&type=chunk) - On August 12, 2024, the company received a Nasdaq deficiency letter for its common stock closing below the minimum **$1.00 bid price** for 30 consecutive business days[175](index=175&type=chunk) - The company has an initial 180-calendar day period, until **February 10, 2025**, to regain compliance with the Nasdaq bid price rule and may consider a reverse stock split[176](index=176&type=chunk)[178](index=178&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the report, including officer certifications and Inline XBRL documents - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and various Inline XBRL documents (Exhibits 101.INS, 101.CAL, 101.SCH, 101.DEF, 101.LAB, 101.PRE, 104)[180](index=180&type=chunk) PART III – SIGNATURES [Signatures](index=52&type=section&id=Signatures) The report was signed by the Chief Executive Officer and Interim Chief Financial Officer on August 12, 2024 - The report was signed by Dr. David Tapolczay, Chief Executive Officer, and James Bligh, Interim Chief Financial Officer, on August 12, 2024[185](index=185&type=chunk)