duit Pharmaceuticals (CDT) - 2024 Q4 - Annual Report

Merger and Corporate Structure - The merger transaction between Conduit Pharmaceuticals Limited and Murphy Canyon Acquisition Corp was completed on September 22, 2023, resulting in the name change to Conduit Pharmaceuticals Inc[374]. Financial Performance - The company reported a net loss of $17.8 million for the year ended December 31, 2024, compared to a net loss of$0.5 million in 2023, indicating a substantial decline in financial performance[430][431]. - Operating losses for the years ended December 31, 2024 and 2023 were $15.4 million and$5.3 million, respectively[409]. - Other income (expense), net changed by $5.8 million, or 118$0.9 million for the year ended December 31, 2024, compared to income of $4.9 million for 2023[405]. - Interest expense, net increased by$1.3 million or 614%, reaching $1.5 million for the year ended December 31, 2024, driven by a$0.9 million increase in amortization of debt issuance costs and a $0.4 million increase in interest on convertible promissory notes[408]. Cash Flow and Capital Requirements - Net cash used in operating activities for the year ended December 31, 2024 was$9.7 million, compared to $7.7 million in 2023, reflecting a significant increase in cash outflows[430][431]. - Cash required for working capital for the next 12 months is approximately$22.9 million, including forecasted research and development costs of $6.0 million and operating expenses of$6.2 million[426]. - The net cash provided by financing activities for the year ended December 31, 2024 was $6.1 million, a decrease from$11.0 million in 2023, primarily due to lower proceeds from financing agreements[434][435]. - The company has incurred net losses since inception and experienced negative cash flows from operations, relying on private placements and convertible debt for capital[409]. Research and Development - Research and development expenses increased by approximately $3.3 million, or 3,653$3.4 million for the year ended December 31, 2024, compared to approximately $90 thousand for the year ended December 31, 2023[403]. - The increase in research and development expenses was primarily driven by a$3.1 million upfront payment to AstraZeneca related to a license agreement, which included $1.5 million in cash and$1.6 million in common shares[403]. - Conduit has a pipeline that includes a pending patent application for a solid-form compound targeting autoimmune disorders, specifically the AZD1656 Cocrystal[378]. - The company plans to leverage AI and cybernetics technology through a partnership with SARBORG Limited to enhance drug development efficiency and reduce costs[384][385]. - The company is focused on developing clinical assets for disorders with significant unmet medical needs, aiming to address large populations[390]. Compliance and Future Outlook - As of March 27, 2025, the company's market value per share is $5,166,785, indicating compliance with Nasdaq Capital Market listing standards[393]. - The company expects to maintain compliance with Nasdaq's Equity Standard through additional fundraising and careful expenditure management[394]. - The company has substantial doubt regarding its ability to continue as a going concern for at least 12 months from the filing date of the Annual Report[412]. Debt and Financing - The A.G.P. Convertible Note issued on November 25, 2024, has a principal amount of$5.7 million, due on November 25, 2025, accruing interest at 5.5% per annum[418]. - The August 2024 Nirland Note has an original principal amount of $2.65 million, including a$500,000 original issuance discount, and may be converted into shares of Common Stock at Nirland's discretion[420]. - As of December 31, 2024, the company raised $3.3 million (net of fees) out of the$23.9 million available through the Sales Agreement, expecting to raise an additional $20.4 million over the next 12 months[427]. - The company has raised an additional$8.1 million, net of fees, through the Sales Agreement after December 31, 2024, leaving $12.0 million available[428]. Operating Expenses - General and administrative expenses rose by$6.9 million, or 133%, to approximately $12.0 million for the year ended December 31, 2024, compared to approximately$5.2 million for the year ended December 31, 2023[404]. - Cash outflow from operating assets and liabilities in 2024 was primarily due to a $2.3 million cash outflow from prepaid expenses and other current assets[430]. - The company has a laboratory space lease with annual rent payments of$0.1 million for the years ending December 31, 2025, and December 31, 2026[436]. Valuation and Accounting - The company utilized Binomial Lattice Pricing Models to estimate the fair value of convertible debt, which includes various significant inputs such as stock price and expected volatility[438][439]. - The fair value of stock options is estimated using the Black-Scholes option-valuation model, which requires subjective assumptions about stock price and expected volatility[446][443]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay adopting new accounting standards[451][452]. - The company is also classified as a smaller reporting company, which permits it to take advantage of scaled disclosures[453].