AI-focused CDT Equity (Nasdaq: CDT) warns of going concern risk
CDT Equity Inc. reports its annual overview as an early-stage, data-driven pharmaceutical developer that licenses clinical compounds from AstraZeneca and seeks to out-license them after pre-clinical and early clinical work. The company focuses on solid-form chemistry and artificial intelligence partnerships to reposition assets for autoimmune disease, idiopathic male infertility, oncology, dermatology, rare disease and animal health.
The report highlights a going concern warning, noting substantial doubt about CDT Equity’s ability to continue operating without additional funding and acknowledging potential dilution from future equity issuance. CDT Equity details multiple related-party agreements, including extensive AI and analytics work with Sarborg Limited and animal-health development with Manoira, as well as consulting and CRO arrangements to advance its pipeline while maintaining a lean, asset-light model.
Positive
- None.
Negative
- Substantial doubt about going concern: CDT Equity states there is substantial doubt regarding its ability to continue as a going concern without additional funding, and warns that failure to raise capital could force delays, limits or termination of programs and operations.
Insights
CDT Equity combines AI-heavy partnerships with licensed assets but faces going concern risk.
CDT Equity pursues an asset-light strategy, licensing Phase I/II-ready compounds from AstraZeneca and using co-crystallization plus AI tools from Sarborg Limited to extend patent life and find new indications. It targets autoimmune disease, idiopathic male infertility, oncology, dermatology, rare disease and animal health.
The company explicitly discloses “substantial doubt” about its ability to continue as a going concern and expects to rely on additional capital and future licensing deals. It has entered several related-party agreements with Sarborg and Manoira, and issues equity retainers to advisors, which increase complexity around dilution and governance but also support pipeline development.
With only $552 aggregate market value of non-affiliate common stock as of June 30, 2025, CDT operates at very small scale. Its strategy depends on successful pre-clinical data, out-licensing to larger partners and continued access to external financing, so funding and execution remain central uncertainties.
Key Figures
Key Terms
going concern financial
reverse stock split financial
co-crystallization technical
Phase II clinical trials medical
risk evaluation and mitigation strategy regulatory
Investigational New Drug Application regulatory
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As
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On January 24, 2025, May 19, 2025, October 10, 2025 and March 26, 2026, the Registrant effected 1-for-100, 1-for-15, 1-for-8 and 1-for-25 reverse stock splits of its authorized shares of common stock, respectively. Each reverse stock split was accompanied by a corresponding decrease in its issued and outstanding shares of common stock. All references to numbers of shares of common stock and per-share information in this Annual Report on Form 10-K have been adjusted retroactively, as appropriate, to reflect the reverse stock splits.
TABLE OF CONTENTS
| PART I | ||
| Item 1. | Business | 1 |
| Item 1A. | Risk Factors | 26 |
| Item 1B. | Unresolved Staff Comments | 51 |
| Item IC. | Cybersecurity | 51 |
| Item 2. | Properties | 52 |
| Item 3. | Legal Proceedings | 52 |
| Item 4. | Mine Safety Disclosures | 52 |
| PART II | ||
| Item 5. | Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 53 |
| Item 6. | Reserved | 53 |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 54 |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 62 |
| Item 8. | Financial Statements and Supplementary Data | 62 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 62 |
| Item 9A. | Controls and Procedures | 63 |
| Item 9B. | Other Information | 64 |
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 64 |
| PART III | ||
| Item 10. | Directors, Executive Officers and Corporate Governance | 65 |
| Item 11. | Executive Compensation | 70 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 73 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 75 |
| Item 14. | Principal Accountant Fees and Services | 80 |
| PART IV | ||
| Item 15. | Exhibits and Financial Statement Schedules | 81 |
| Item 16. | Form 10-K Summary. | 85 |
| Signatures. | 86 |
| i |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) and the information incorporated herein by reference contain forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. This includes, without limitation, statements regarding the financial position and the plans and objectives of management for our future operations. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Annual Report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report and in any document incorporated by reference in this Annual Report may include, for example, statements about:
| ● | the ability to maintain the listing of our securities on The Nasdaq Stock Market LLC (“Nasdaq”), and the potential liquidity and trading of our securities; | |
| ● | the risk of disruption to our current plans and operations; | |
| ● | the ability to recognize the anticipated benefits of our business and the business combination completed in September 2023 (the “Business Combination”), which may be affected by, among other things, competition and the ability to grow, manage growth profitably, and retain key employees; | |
| ● | costs related to our business; | |
| ● | changes in applicable laws or regulations; | |
| ● | our ability to meet future capital requirements to fund our operations, which may involve debt and/or equity financing, and to obtain such debt and/or equity financing on favorable terms, and our sources and uses of cash; | |
| ● | our ability to execute our plans to develop and commercialize our current clinical assets, as well as any future clinical assets that we license, and the timing of any such commercialization; | |
| ● | our ability to maintain existing license agreements; | |
| ● | our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing; | |
| ● | our ability to use artificial intelligence and our relationship with Sarborg Limited to enhance our decision-making processes and maximize the value of our pharmaceutical asset portfolio; | |
| ● | the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against us; and | |
| ● | other factors disclosed under the section entitled “Risk Factors” in this Annual Report. |
These forward-looking statements are based on information available as of the date of this Annual Report and current expectations, forecasts, and assumptions, and involve a number of judgments, risks, and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.
| ii |
TRADEMARKS
This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Annual Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of it by, any other companies.
SUMMARY OF RISK FACTORS
The following is a summary of the principal risks that could adversely affect our business, financial condition, operating results, cash flows and/or stock price. Discussion of the risks listed below, and other risks that we face, are discussed in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report.
Risks Related to Our Business and Industry
| ● | Our business is dependent on the successful development, regulatory approval, and commercialization of our clinical assets, in particular a glucokinase activator which we believe is active in a range of autoimmune disorders, which we refer to as AZD1656, and a potent, irreversible inhibitor of human Myeloperoxidase that has the potential to treat idiopathic male infertility, which we refer to as AZD5904. | |
| ● | Preclinical drug development for our clinical assets is expensive, time-consuming, and uncertain. Our preclinical trials may fail to adequately demonstrate pharmacologic activity in therapeutic areas of interest; cause unintended short- or long-term effects in other bodily systems; or produce unexpected toxicity that may alter or risk benefit assessment. | |
| ● | We may not be successful in our efforts to use and expand our research and development platform to build a pipeline of clinical assets. | |
| ● | Clinical drug development for our clinical assets is very expensive, time-consuming, difficult to design and implement, and uncertain. Our clinical trials may fail to adequately demonstrate the safety and efficacy of our clinical assets, which could prevent or delay regulatory approval and commercialization. | |
| ● | We may be unable to obtain regulatory approval for our early-stage clinical assets under applicable regulatory requirements. The U.S. Food and Drug Administration (the “FDA”) and foreign regulatory bodies have substantial discretion in the approval process, including the ability to delay, limit, or deny approval of clinical assets. The delay, limitation, or denial of any regulatory approval would adversely impact commercialization, our potential to generate revenue, our business, and our operating results. | |
| ● | We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance coverage for those claims is inadequate. | |
| ● | We currently rely on, and expect to continue to rely on, third-party contract research organizations (“CROs”) and other third parties to conduct and oversee our clinical trials and other aspects of product development. If these third parties do not meet our requirements or otherwise conduct the trials as required, we may not be able to satisfy our contractual obligations or obtain regulatory approval for, or commercialize, our clinical assets when expected or at all. | |
| ● | Manufacturing and supply of the active pharmaceutical ingredients (“APIs”) and other substances and materials used in our clinical assets is a complex and technically challenging undertaking, and there is potential for failure at many points in the manufacturing, testing, quality assurance, and distribution supply chain, as well as the potential for latent defects after products have been manufactured and distributed. |
Risks Related to Intellectual Property
| ● | Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and operating results. | |
| ● | We may not be able to protect our intellectual property rights throughout the world. | |
| ● | Our intellectual property rights throughout the world may be challenged by third parties, on prospectively a correct or incorrect basis |
Risks Related to Securities Markets and Investment in Our Stock
| ● | Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. |
Risks Related to Finances and Capital Requirements
| ● | There is substantial doubt regarding our ability to continue as a going concern. We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our commercial programs, product development efforts or other operations, all of which could have a material adverse effect on the Company and its financial results. | |
| ● | We may issue additional shares of common stock or preferred stock, including issuances upon exercise of outstanding pre-funded warrants, in connection with capital raising transactions and under an employee incentive plan, which issuances would significantly dilute the interest of our stockholders. |
| iii |
PART I
Item 1. Business
Overview
CDT Equity Inc., formerly Conduit Pharmaceuticals Inc., a Delaware corporation (“CDT”, “CDT Equity” or the “Company”), is a data-driven pharmaceutical development, focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships. The Company has evolved into a broader, more agile platform that leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development of novel treatments.
The Company’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by larger pharmaceutical companies with strong, supporting Phase I safety data. Through advanced co-crystallization and solid-form technologies developed at our Cambridge facilities, the Company improves drug properties and extends patent life by up to 20 years. In partnership with Sarborg Limited (“Sarborg”), the Company also applies AI-powered signature analysis to rapidly identify new therapeutic applications and combinations for existing compounds.
The Company’s pipeline includes candidates that target autoimmune disorders, as well as idiopathic male infertility, oncology, dermatology, rare disease and animal health. Ongoing in vitro and in vivo studies, guided by AI insights, are designed to support licensing and commercialization partnerships. The Company will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, by entering into agreements with third-parties to pursue further development, FDA approval, commercialization and marketing of the Company’s assets.
Operating with a lean, asset-agnostic model, the Company prioritizes speed, adaptability, and capital efficiency. We avoid the cost burden of early and late-stage clinical trials, focusing instead on high-leverage development strategies.
Our current pipeline includes candidates targeting inflammatory and autoimmune disorders, as well as idiopathic male infertility, dermatology, and animal health. The intellectual property portfolio comprises pending patent applications in several international jurisdictions describing a solid-form compound, including the AZD1656 Cocrystal (a HK-4 Glucokinase Activator). Our pipeline research includes a number of compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which we have identified as potential opportunities to develop further intellectual property positions through solid-form technology.
On December 12, 2024, Sarborg and the Company entered into an agreement (the “Sarborg Agreement”) designed to address longstanding challenges in the pharmaceutical sector, in particular by reducing human error in critical decision-making processes in both clinical development and asset identification. By integrating Sarborg’s signature intelligence technology, the Company aims to enhance efficiency, lower costs, and accelerate timelines by minimizing human intervention, ultimately optimizing the drug development cycle and giving the Company a competitive advantage in the sector. Through this relationship, the Company will gain access to cutting-edge predictive models and dashboards, enabling the Company to evaluate drug candidates, streamline clinical trials, and optimize asset management with real-time data. These tools will drive faster, more accurate decisions, improving efficiency and reducing costs. By leveraging these insights, the Company can differentiate itself in a competitive sector and gain unique data-driven insights that position the Company for success across both its current and future asset portfolio. Our collaboration with Sarborg enables us to apply proprietary algorithms utilizing AI-powered disease mapping to identify novel re-purposing opportunities across a database of more than 3,000 disease signatures. Sarborg’s insights have directly informed two new combination patent filings, strengthening our intellectual property portfolio. In addition, the Company has initiated pre-clinical in-vitro models to explore new indications, guided by AI-insights without human intervention. We will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, entering into agreements with third parties to pursue further development, FDA approval, commercialization, and marketing of our assets. We continue to evaluate novel artificial intelligence and cybernetics approaches to drug re-purposing, intellectual property, and asset selection to give the Company a competitive advantage. Sarborg is considered to be a related party of CDT, as Dr. Andrew Regan, Chief Executive Officer of CDT, also sits on the board of directors of Sarborg, and Chele Chiavacci Farley, a director of CDT is also a shareholder of Sarborg. Refer to Note 16 and Note 20 to our financial statements included elsewhere in this Annual Report for additional details on the relationship between CDT and Sarborg.
A further partnership with Manoira Corporation (“Manoira”) (as described more in this Annual Report) enables the Company to expand the scope of its drug portfolio into the animal health market in a cost-efficient manner. This collaboration allows us to accelerate the understanding of the mechanism of action, safety, and potential efficacy of its portfolio across multiple species, while retaining 100% ownership of all data and intellectual property generated relating to human applications. This is expected to enhance the core human therapeutic pipeline but also opens potential new revenue streams in the high-growth veterinary market.
| 1 |
Repositioning the Company enables us to explore multiple opportunities in the healthcare, biotech and broader technology innovation. Operating with a lean disease-agnostic model, the Company prioritizes speed, adaptability, and capital efficiency. We avoid the cost burden of late-stage clinical trials, focusing instead on high-leverage development strategies. Led by highly experienced executives: Dr. Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair of the Company’s Board; Dr. Andrew Regan, CEO and James Bligh, CFO; our management team includes active senior executives who also have an extensive understanding of the pharmaceutical market, supporting our strategy of developing clinical assets in a cost-efficient manner focused on therapeutic efficacy.
Simultaneously, CDT leverages the capabilities of our Cambridge laboratory facility and highly experienced team of solid-form experts to extend or develop proprietary solid-form intellectual property for our existing and future clinical assets. Our own intellectual property portfolio comprises pending patent applications in several international jurisdictions describing a solid-form compound, including the AZD1656 Cocrystal (a HK-4 Glucokinase Activator), targeting a wide range of autoimmune disorders. Our pipeline research includes a number of compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which we have identified as having an opportunity to develop further intellectual property positions through solid-form technology.
We believe that successful pre-clinical trials of the assets in our pipeline will increase the value of our assets. There is no assurance that any pre-clinical trials on the assets owned or licensed by us will be successful, however, following a successful pre-clinical trial, we would look to licensing opportunities with large biotech or pharmaceutical companies, typically for up-front milestone payments and royalty income streams for the life of the asset patent. We anticipate using any future royalty income stream to develop our asset portfolio in combination with other potential sources of financing, including debt or equity financing.
Our Initial Pipeline: HK-4 Glucokinase Activator Cocrystal, AZD1656, and its metabolite AZD5658 and AZD5904
In August 2024, AstraZeneca granted a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for development and commercialization of the Licensed Products under the related License Agreement. The Company is required to use commercially reasonable efforts to develop and commercialize the Licensed Products.
AstraZeneca has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further development. As the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to use the safety data generated in these clinical trials to assess which clinical assets to further develop and re-purpose.
On June 3, 2025, the Company entered into a joint development agreement (the “Joint Development Agreement”) with Manoira for a term of one year, which will be automatically renewed for successive one-year terms unless advance termination notice is provided in accordance with the terms of the Joint Development Agreement. Manoira is an entity controlled by Dr. Andrew Regan, of which he is sole director, and is therefore considered a related party of the Company.
Pursuant to the Joint Development Agreement, the Company granted Manoira a non-exclusive, non-transferable, non-sublicensable, fully paid-up, royalty-free license to the intellectual property rights related to the pharmaceutical compounds known individually and together as AZD1656 and AZD5658 (the “CDT Assets”). Manoira will evaluate the CDT Assets’ applicability in animal health, explore veterinary market opportunities, and provide data from the evaluations to inform the Company’s human clinical programs. The license does not grant Manoira the right to distribute, market, promote or sell the products or services that are related to or incorporate the CDT Assets.
| 2 |
In addition, we currently have the exclusive rights to develop clinical assets, AZD1656 and AZD5658 in all human indications and AZD5904 in idiopathic male infertility which are licensed to us by AstraZeneca.
Pursuant to the various programs, AZD1656 underwent Phase I and Phase II clinical trials consisting of 23 studies in 526 subjects, 446 of whom were dosed with AZD1656. Other than for the intended effect of lowering glucose, there were no difference identified between the AZD1656-treated and placebo-treated subjects relating to adverse events. All of the cases where low glucose levels were identified were managed by the patients and resolved. Based on these clinical trials, no safety signals were identified regarding vital signs, safety laboratory values or electrocardiogram data. No deaths occurred in any studies with healthy volunteers or patients. AZD1656 was also subject to Phase II clinical trials consisting of two studies where AZD1656 was given to patients with Type 2 Diabetes Mellitus for four months or longer. In total, there were 754 randomized patients, 516 of whom were exposed to AZD1656 (316 men and 200 women). There were no clinically important differences in the adverse effects profile between the AZD1656 treatment group and the AZD1656 placebo group and there were no deaths in either of the Phase II studies. The efficacy of AZD1656 as a potential treatment for diabetes was also assessed during the Phase II clinical trials, including whether the efficacy was statistically significant. Clinically relevant and statistically significant reductions in HbA1c were seen after four months; however, the initial improvement in glucose control deteriorated over time and the change in HbA1c levels after four months were not statistically different than the placebo. This decreasing efficacy over time was seen in both Phase II studies.
AZD5658 was subject to a randomized, single-blind, placebo-controlled, single-center, Phase I study to assess the safety, tolerability, pharmacokinetics, pharmacodynamics and the effect of fasting after single ascending oral doses of AZD5658 in Type 2 Diabetes Mellitus patients. There were six dose levels with eight patients in each cohort, six receiving AZD5658 and two receiving placebo. The effect of fasting on the pharmacokinetics of AZD5658 was also studied for two dose levels. Each patient treated with metformin received a maximum of two single oral suspension doses (one on a low dose of AZD5658/placebo and one on a high dose of AZD5658/placebo under fed conditions), except for patients participating in the evaluation of the effect of fasting, who received a maximum of three single oral suspension doses. For each patient, the study included a pre-entry visit (Visit 1), two or three clinic-based treatment visits (Visit 2, 3, and 4) and a follow-up visit (Visit 5). Hence, the total duration of the study for each patient was approximately two and one-half months, assuming three weeks between dose levels. There were no deaths, serious adverse events, discontinuations due to adverse events, or adverse events of severe intensity during the study. Overall, there were 13 (61.9%) AZD5658-treated patients with adverse events compared to 2 (28.6%) patients who received placebo. There were no trends noted with increasing dose in the number of adverse events overall or within any preferred term. The most frequently occurring adverse events were hypoglycemia and diarrhea, each occurring in three AZD5658-treated patients. One adverse event of ear pain (30 mg AZD5658 fed) was assessed by the study investigator as moderate in intensity; all other adverse events were of mild intensity. Five adverse events in AZD5658- treated patients were assessed by the investigator as causally related to investigational product, including hypoglycemia in three patients (100 mg, 200 mg fasted, and 400 mg AZD5658), diarrhea in one patient (200 mg AZD5658 fasted), and headache in one patient (30 mg AZD5658). No adverse events in placebo-treated patients were assessed as causally related to investigational product. The three patients who experienced hypoglycemia adverse events were treated with intake of food or orange juice and the episodes resolved in less than one hour.
AZD5904 was subject to five Phase I clinical studies, with a total of 1,181 subjects being exposed to AZD5904. Single doses of up to 1200 mg and multiple doses of up to 325 mg for up to three times per day for 21 days have been administered as an oral solution in the completed clinical studies. In addition, single doses of up to 1,400 mg and multiple doses of up to 600 mg for 10 days have been administered as an “extended release” formulation. The data from these studies did not identify any expected adverse drug reactions for AZD5904 and no adverse effects were reported as related to AZD5904. In addition, the data revealed no clinically significant changes in blood pressure or pulse rate related to AZD5904 and electrocardiogram data was within the physiological range for the population studied. The effect of AZD5904 on human myeloperoxidase, which we refer to as MPO, activity was evaluated by determination in an ex vivo assay of MPO activity in plasma. The correlation between MPO activity and plasma concentrations was assessed for single and multiple doses of AZD5904. A relationship between plasma concentrations of AZD5904 and MPO activity was demonstrated, which indicates that AZD5904 may be an effective inhibitor of MPO activity in humans. However, Phase I trials do not assess statistical significance so additional Phase II trials are necessary to determine if the inhibition of MPO activity as a result of AZD5904 is statistically significant.
Our Development Strategy
The Company’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by larger pharmaceutical companies with strong, supporting Phase I safety data. Through advanced co-crystallization and solid-form technologies developed at our Cambridge facilities, the Company improves drug properties and extends patent life by up to 20 years. In partnership with Sarborg Limited, the Company also applies AI-powered disease mapping to rapidly identify new therapeutic applications for existing compounds.
To enable us to monetize our clinical assets, we, in partnership with CROs and KOLs, intend to conduct additional pre-clinical trials on our assets in order to generate clinical data to support the further development of our assets beyond the Phase I stage. In the event successful pre-clinical trial data is generated for an asset with a particular indication, at that point, we will seek to enter into a license, royalty, or other transaction with a third party whereby the third party would continue to pursue the development of the clinical asset in clinical trials, including Phase I, where necessary, and beyond. There is no assurance that any pre-clinical trials on the assets owned or licensed by us will be successful. We intend to use the income received from licensing assets in our pipeline to fund the development of additional assets, which will allow us to use the existing income stream from assets that have been licensed to fund our on-going operations, including the development and commercialization of additional assets, without having to rely solely on debt and/or equity financing.
| 3 |
Principal Strategic Partnerships
Services Agreement – CDT Equity and Sarborg Limited
On December 12, 2024, the Company entered into a Services Agreement (the “Sarborg Agreement”) with Sarborg, a Cayman Islands company and related party of the Company. Under the terms of the Sarborg Agreement, Sarborg agreed to provide algorithmic and cybernetic technology services to CDT, including the development of decision-support tools and advanced cybernetic systems tailored to enhance CDT’s decision-making processes and maximize the value of its pharmaceutical asset portfolio.
Sarborg agreed to perform the services to CDT comprised of three phases: the Initial Phase (0-24 weeks) focuses on establishing a foundation for collaboration and aligning Sarborg’s services with CDT’s strategic goals; the Development Phase (24-36 weeks) involves building technological infrastructure, including dashboards and predictive models; and the Ongoing Services Phase (36-52 weeks) ensures the sustained functionality and relevance of Sarborg’s deliverables while supporting CDT’s growth through iterative improvements and updates. Sarborg will create specific deliverables, including reports, computer programs, software applications, APIs, mobile applications, source code, written technical specifications and designs, operating and maintenance manuals, and other recorded data and information arising from or relating to the services. Sarborg will provide all necessary resources to perform the services and deliver the deliverables in accordance with the Sarborg Agreement. To date, Sarborg has successfully completed all phases and has achieved all milestones provided for pursuant to the Sarborg Agreement.
During the year ended December 31, 2025, the Company incurred costs under the Sarborg Service Agreement, including $1.8 million of milestone payments related to the Services Agreement and $0.4 million of expense to be capitalized related to the delivery and ongoing use of a diagnostic dashboard. Of the total costs incurred, $0.4 million was capitalized as a diagnostic asset associated with the dashboard, of which $0.2 million was amortized during the year and recorded within general and administrative expenses in the consolidated statement of operations and comprehensive loss. The remaining $2.2 million, consisting of milestone payments and related services (including signature mapping reports), was expensed as incurred within research and development expenses. As of December 31, 2025, there were no outstanding payables under the Sarborg Service Agreement.
SARBORG Additional Agreement
Effective March 31, 2025, the Company entered into an additional license and use agreement (the “Sarborg Additional Agreement”) with Sarborg, a related party, for analysis of acquired AstraZeneca assets. The agreement provides for $2.0 million in total consideration, payable in cash or stock. On March 31, 2025, the Company prepaid $1.65 million through the issuance of 617 shares of Common Stock, recorded at fair value of $2,670 per share. The term was extended from six to 12 months on May 2, 2025 at no additional cost. Effective October 1, 2025, the term was extended to be 12 months from the previous extension to extend the term of the license to March 31, 2027 at no additional cost to the Company. The Company recorded the fair value of $1.5 million as prepaid within the consolidated balance sheets. During the year ended December 31, 2025, the Company recorded research and development expense of $1.3 million within the consolidated statements of operations and comprehensive loss related to the Sarborg Additional Agreement. As of December 31, 2025, $0.6 million of the prepaid balance remains within the consolidated balance sheet.
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First Addendum to the SARBORG Additional Agreement
Effective July 1, 2025 the Company entered into an Addendum (the “First Addendum”) to the Additional Agreement with Sarborg, to expand the scope to include third-party pharma asset analysis for drug re-purposing using Sarborg’s machine learning platform. The scope of work was expected to be completed in four weeks, with options for renewal by mutual agreement. The Company paid $0.3 million during the year ended December 31, 2025 and included the total in the consolidated statement of operations and comprehensive loss.
Second Addendum to the SARBORG Additional Agreement
Effective August 11, 2025 the Company entered into Addendum 2 (the “Second Addendum”) to the Additional Agreement with Sarborg to integrate a Cryptocurrency AI Agent for identifying, forecasting, and recommending digital currencies into CDT Equity’s treasury operations. The term is a minimum of four months, renewable by mutual agreement. The Company paid $0.3 million during the year ended December 31, 2025 and included the total in the consolidated statement of operations and comprehensive loss.
Consulting Agreement with NJS Foresight Bio-Advisory, LLC
On January 2, 2026, the Company entered into a Consulting Agreement, dated December 29, 2025 (the “NJS Agreement”) with NJS Foresight Bio Advisory, LLC (“NJS”) pursuant to which NJS agreed to provide advisory and business development services to the Company focused on identification, introduction and support of potential licensing partners in connection with the out-licensing of the Company’s asset portfolio. Work under the NJS Agreement commenced on December 30, 2025. On February 23, 2026 (the “NJS Effective Date”), the Company and NJS entered into Addendum No. 1 to the NJS Agreement (the “NJS Addendum”) to extend the term of the NJS Agreement an additional twelve months from its initial termination date, December 29, 2026, to December 29, 2027, unless terminated earlier in accordance with its terms. As consideration for entering into the NJS Addendum, on the NJS Effective Date, the Company paid an additional one-time fixed retainer of $150,000 (the “NJS Extension Retainer”) in the form of 7,989 shares of Common Stock (the “NJS Shares”) issued to NJS, valued at $18.77 per share, the closing price of the Common Stock on February 20, 2026, the trading day prior to the NJS Effective Date. All other terms and conditions contained in the NJS Agreement remain the same. The Company recorded the $0.2 million consideration to NJS as a prepaid expense on the Company’s consolidated balance sheet as of December 31, 2025.
Master Service Agreement – CDT and Charles River Laboratories
On February 7, 2025, CDT and Charles River Laboratories (“Charles River”) entered into a Master Services Agreement (the “Charles River MSA”). Under the Charles River MSA, Charles River agreed to provide preclinical testing and research services to CDT, including the evaluation of compounds in animal models and other related services. The services are defined in individual Statements of Work (“SOWs”) or Protocols, which outline the specific scope, design, and timelines for each study. To date, all services provided for pursuant to the Charle s River MSA have been completed. For the year ended December 31, 2025, the Company recognized $0.2 million in research and development expense in the consolidated statement of operations and comprehensive loss related to the Charles River MSA.
Thesprogen Consulting Agreement
Effective March 25, 2025, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Thesprogen PC (“Thesprogen”), an expert in advising clients on strategies for pharmaceutical and biotech development. Consulting fees were settled through the issuance of fully vested unregistered Common Stock shares, valued at the fair value of the shares based on the closing share price of the shares at issuance. The Company recorded the transaction as prepaid and recognized research and development expense through amortization during the periods ended December 31, 2025. On February 24, 2026 (the “Thesprogen Effective Date”), the Company and Thesprogen entered into Addendum No. 1 to the Thesprogen Agreement (the “Thesprogen Addendum”) to extend the term of the Thesprogen Agreement an additional twelve months from its initial termination date, June 28, 2026, to June 28, 2027, unless terminated in accordance with its terms. As consideration for entering into the Thesprogen Addendum, on the Thesprogen Effective Date, the Company paid an additional one-time fixed retainer of $245,000 (the “Thesprogen Extension Retainer”) in the form of 13,668 shares of Common Stock (the “Thesprogen Shares”) issued to Thesprogen, valued at $17.93 per share, the closing price of the Common Stock on February 23, 2026, the trading day prior to the Thesprogen Effective Date. All other terms and conditions contained in the Thesprogen Agreement remain the same. During the year ended December 31, 2025, the Company recorded research and development expense of $0.3 million within the consolidated statements of operations and comprehensive loss related to the amortization of the prepaid expense.
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Manoira Joint Development Agreement
On June 3, 2025, the Company entered into the Joint Development Agreement with Manoira for a term of one year, which will be automatically renewed for successive one-year terms unless advance termination notice is provided in accordance with the terms of the Joint Development Agreement. Manoira is an entity controlled by Dr. Andrew Regan, of which he is sole director, and is therefore considered a related party of the Company. See Note 16 for additional details.
Under the agreement, the Company granted Manoira a non-exclusive, non-transferable, royalty-free license to intellectual property rights related to pharmaceutical compounds AZD1656 and AZD5658. Manoira will evaluate the compounds for animal health applications, explore veterinary market opportunities, and provide data to inform the Company’s human clinical programs. The license does not permit distribution, marketing, promotion, or sale of related products.
Consideration was settled through the issuance of Common Stock shares, valued at fair value based on the closing price of the shares. The Company recorded the fair value of $0.4 million as prepaid within the consolidated balance sheets. During the year ended December 31, 2025, the Company recorded $0.1 million amortization expense for research and development activities provided to date.
Market Overview
Global Biotechnology Industry
The global biotechnology industry comprises a large range of companies engaged in diverse activities, such as biopharmaceutical development. The industry companies also span across a wide spectrum of operational models. Some small, dedicated biotechnology companies are research and development (“R&D”) intensive and operate primarily with venture capital, grants, initial public offerings and collaborative agreements. Conversely, large, diversified companies hold significant in-house R&D resources and well-established production, commercialization, and distribution processes.
Management believes that the global biotechnology market was valued at $1.77 trillion in 2025 and is projected to grow at a compound annual growth rate (“CAGR”) of 13.9% from 2025 to 2033.1 The market is driven by strong government support through initiatives aimed at the modernization of regulatory framework, improvements in approval processes and reimbursement policies, as well as standardization of clinical studies.
Global investor confidence has fallen during the period, which served to somewhat subdue revenue growth. However, global investment in R&D has grown strongly and consistently in recent years, with much of this funding funneled into medical biotechnology development, aimed at providing better care for the aging global population, thus bolstering industry revenue.
Global Pharmaceutical Industry
Over the previous five years, pharmaceutical companies have benefited from an aging population in developed economies and a growing middle class in emerging economies. Many companies have also tapped into regional demand for pharmaceuticals that may differ from developed markets and have expanded their global presence to tap into regional market needs.
Patent cliffs have continued to hamper industry revenue during the current period. When drugs lose patent exclusivity, the market is inundated with low-cost generic drugs. As manufacturers contend with more price-based competition from generics, many operators respond by lowering their R&D expenditures, which limits the industry’s drug pipelines. Additionally, many governments and health insurance organizations have reduced their drug reimbursements to control healthcare costs, such as implementing incentives for patients to use generic drugs.
Industry revenue has expanded at a compound annual growth rate of approximately 5.4% over the past five years to $857.1 billion, with continued growth of approximately 3.4% expected in 2025, supported by sustained global demand for biotechnology products. However, growth remains dependent on clinical success, regulatory approvals, manufacturing execution and access to capital, as companies increasingly prioritize capital efficiency, differentiated pipelines and strategic partnerships in a more selective funding environment.2
1(2026, January 02). Biotechnology Market Size, Share, and Trends 2026 to 2035. Precedenceresearch.com https://www.precedenceresearch.com/biotechnology-market.
2 IBISWorld Industry Report L6724-GL – Global Biotechnology, January 2026
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Manufacturing
The Company has a lease agreement for approximately 2,100 square feet of space in Cambridge, England, with a term from March 2024 to January 2027. At the Cambridge facility aforementioned, we are developing advanced co-crystallization and solid-form technologies.
We otherwise do not currently own or operate any facilities to formulate, manufacture, test, store, package, or distribute any of the clinical assets that we are developing or may seek to develop and do not currently have the capabilities to conduct such activities. We currently rely on third parties to manufacture, store, and test the clinical assets that we seek to develop. We will depend on third-party suppliers and manufacturing organizations for all our required raw materials and drug substance and to formulate, manufacture, test, store, package, and distribute clinical trial quantities of clinical assets that we may seek to develop. We plan to continue to use third-party suppliers and manufacturing organizations and we anticipate expanding our network of third-party suppliers and manufacturing organizations as our operations expand.
We have internal personnel and utilize consultants with extensive technical, manufacturing, analytical, and quality experience to oversee our contract manufacturing and testing activities. Manufacturing is subject to extensive regulations that impose procedural and documentation requirements, including, but not limited to, record-keeping, manufacturing processes and controls, personnel, quality control, and quality assurance. Our systems, procedures, and contractors are required to be in compliance with these regulations and are assessed through regular monitoring and formal audits.
Research and Development
Our research and development activities have included developing co-crystals of AZD1656, and other products, to increase patent life. Most of this work is conducted in our laboratories based in Cambridge, UK, but parts of this work is completed by third-party CROs but all intellectual property is retained by us. The successful completion of clinical trials increases the value of clinical assets and may lead to the commercialization and/or licensing of such assets to other pharmaceutical companies. There is no assurance that any clinical trials on the assets owned or licensed by us will be successful or any assurance our co-crystal development will be successful.
We do not intend to further fund the research and development of the use of AZD1656 in Covid; however, we retain an economic interest in the AZD1656 in the indication of Covid and if AZD1656 is further developed in Covid through funding provided by other third parties, then we may be entitled to receive compensation from those development activities conducted by third parties due to its economic interest in AZD1656 in Covid.
Sales and Marketing
We do not currently have marketing, sales, or distribution capabilities. In order to commercialize any clinical asset that is approved for commercial sale, we must either develop our own sales, marketing, and distribution infrastructure or collaborate with third parties that have such commercial infrastructure and relevant marketing and sales experience. We anticipate relying on licensing, co-sale, co-promotion, and distribution agreements with strategic partners for the commercialization of our products. We do not currently anticipate that we would develop our own internal sales force organization.
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Competition
We operate in the highly competitive pharmaceutical and biotechnology industry. Our competitors may include public and private companies, universities, governmental agencies, and other research organizations actively engaged in the research and development of clinical assets and biopharmaceutical products. Our competitors may have greater financial, technical, and human resources than we currently have and/or may be better equipped to develop, manufacture, and market their products. Our competitors may be developing clinical assets for products for similar indications. However, we believe that we have an unprecedented advantage in novelty. As discussed above, AZD1656 is an activator (not an inhibitor) of a metabolic process. We anticipate that the number of companies seeking to develop clinical assets, biopharmaceutical products, and therapies will continue to increase. As a result, the competition we face may also increase. However, both in the treatment of autoimmune disease and idiopathic male infertility the competition is currently expected to come in years, even if biopharmaceutical products that we develop and/or commercialize were not to compete with products of our competitors based on the product efficacy, safety, ease of use, price, demonstrated cost-effectiveness, marketing effectiveness, service, reputation, and access to technical information. However, we believe that our ability to focus on clinical assets that have been deprioritized by larger pharmaceutical companies is a competitive advantage.
Intellectual Property
We hold exclusive rights to develop AZD1656, AZD5658, and AZD5904 through our License Agreement with AstraZeneca and we also own the intellectual property and the rights to further develop co-crystals resulting from our prior research and development work on AZD1656.
On December 18, 2024, Conduit UK Management Limited (“Conduit UK”) received a notification from the UK Intellectual Property Office (“UK IPO”) notifying the company that St George Street Capital had initiated patent entitlement proceedings with respect to patent application PCT/IB2022/00775 (“Patent Application”). Conduit UK refutes the claims made by St George Street Capital and filed a counterstatement on February 26, 2025 with the UK IPO. In addition, each of the three inventors named in the Patent Application filed simultaneous counterstatements fully supporting Conduit UK’s position, and assertions that the claims are without merit. Further updates will be made following notification by the UK IPO.
We currently have eight pending patent applications in several international jurisdictions. Even though we have filed patent applications, there is no guarantee that the validity of the patents will be upheld if challenged by a third party, that patents will be granted on the applications filed in the respective jurisdictions, or that once granted, the patents will contain claims that encompass our commercial products. There can be no assurance that any of our intellectual property rights will afford us any protection from competition.
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The following patent applications are relevant to the operation of our business:
| Related Clinical Asset | Mechanism of Action | Patent Information and Number | Patent Ownership/Licensing Status; Patent Status |
Jurisdictions Protected | Expiration | |||||
| AZD1656 | Glucokinase Activator | Composition of Matter Patent; 101901 (family number) | Licensed to CDT from AstraZeneca for use in all human indications. Granted and in force. | Brazil, Canada, Switzerland, China, Germany, European Procedure, Spain, France, United Kingdom, Hong Kong, India, Japan, South Korea, Mexico, Netherlands, Russian Federation, Sweden, Turkey, United States. Granted in Australia | Expires July 3, 2026.
| |||||
| AZD1656 | Glucokinase Activator | Polymorph Patent; 103631 (family number) | Licensed to CDT from AstraZeneca for use in human applications. Granted and in force. | China and United States | Expires February 2030. | |||||
| AZD1656 | Glucokinase Activator | Co-crystal PCT/IB2022/00075 | Owned by CDT. Filed September 2, 2022. |
Global | Filing date September 2, 2022. If granted, will expire September 2, 2042. | |||||
| AZD1656 | Glucokinase Activator | Co-crystal JP2022-176753 | Owned by CDT. Filed November 2, 2022. |
Granted: Japan | Expires November 2, 2042. | |||||
| AZD5904 | MPO Inhibitor | Idiopathic Male Infertility; AZD5904 use patent; 200644 (family number) [WO/2019/016074] |
Licensed to CDT from AstraZeneca. | International Description | Expires July 12, 2038.
| |||||
| AZD5658 | Glucokinase Activator | Composition of Matter Patent; 101901 (family number) | Licensed to CDT from AstraZeneca for use in all human indications. Granted and in force. | Australia, Brazil, Canada, Switzerland, China, Germany, European Procedure, Spain, France, United Kingdom, Hong Kong, India, Japan, South Korea, Mexico, Netherlands, Russian Federation, Sweden, Turkey, United States | Expires July 3, 2026 |
We have not filed any applications for trademark protection of any names or logos for products or technologies in development. We plan to seek trademark protection inside and outside of the United States where and when appropriate and if available. We intend to use these registered marks in connection with our pharmaceutical research and development, including proprietary technologies, as well as our clinical assets.
We expect to protect our products and technologies through a combination of patents, regulatory exclusivity, and potentially confidential and proprietary know-how. We intend to actively seek to obtain, where appropriate, the broadest commercially reasonable intellectual property protection possible for our clinical assets and technologies, including any future clinical assets and technologies under development, our proprietary information, and our proprietary technology through a combination of contractual arrangements and patents, in the United States and abroad. However, we cannot guarantee that patent protection will provide complete protection against competitors who seek to circumvent our patents.
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Government Regulation and Product Approval
Government authorities in the United States, at the federal, state, and local level, and in other countries, extensively regulate, among other things, the research, development, clinical trials, testing, manufacture, including any manufacturing changes, authorization, pharmacovigilance, adverse event reporting, recalls, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of pharmaceutical products and clinical assets, including clinical assets such as those we are developing. The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations have no guaranteed outcomes and require the expenditure of substantial time and financial resources.
Our development plan for AZD5904 is to conduct clinical trials and if those trials are successful, we will then seek to enter into a transaction with a third party with respect to AZD5904, as applicable, for the particular indication. Pursuant to the Joint Development Agreement, the Company granted Manoira a non-exclusive, non-transferable, royalty-free license to intellectual property rights related to pharmaceutical compounds AZD1656 and AZD5658. Manoira will evaluate the compounds for animal health applications, explore veterinary market opportunities, and provide data to inform the Company’s human clinical programs. The license does not permit distribution, marketing, promotion, or sale of related products.
We anticipate developing clinical assets, which we own or license from third parties, that have undergone pre-clinical and clinical trials through the Phase II stage and then monetizing such clinical assets through a license, royalty, or other transaction. We do not expect that we will commercialize any clinical assets or seek marketing approval from the FDA (or similar organizations) as we intend to enter into agreements with third parties following Phase II clinical trials for each such clinical asset that would provide that such third party would pursue the further development, commercialization, and marketing of such assets.
The following description of the process relating to obtaining regulatory approvals in the United States and in foreign countries is intended for informational purposes only as we do not expect to continue the development of any of the clinical assets beyond the Phase II stage. There is no assurance that any clinical trials on the assets owned or licensed by us will be successful.
United States Government Regulation
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and implementing regulations. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New Drug Applications (“NDAs”), withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil and/or criminal penalties.
The process required by the FDA before a drug may be marketed in the United States generally involves the following steps, each of which requires the expenditure of substantial time and financial resources:
| ● | completion of preclinical laboratory tests, animal studies and formulation studies in compliance with good laboratory practices (“GLPs”) and other applicable regulations; | |
| ● | submission to the FDA of an Investigational New Drug Application (“IND”), which must become effective before human clinical trials may begin; | |
| ● | approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; | |
| ● | performance of well-controlled human clinical trials in accordance with good clinical practices (“GCPs”), which may include placebo controls, to establish the safety and efficacy of the proposed drug product for each indication; | |
| ● | submission to the FDA of an NDA and payment of fees; | |
| ● | satisfactory completion of an FDA advisory committee review, if applicable; | |
| ● | satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices (“cGMPs”) and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; | |
| ● | satisfactory completion of audits of clinical trial sites conducted by FDA to assure compliance with GCPs and the integrity of clinical data; and | |
| ● | FDA review and approval of the NDA. |
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Preclinical Studies
Preclinical studies include laboratory evaluation of product chemistry, toxicity, and formulation, as well as animal studies to assess potential safety and efficacy. Preclinical tests intended for submission to the FDA to support the safety of a clinical asset must be conducted in compliance with GLP regulations and the U.S. Department of Agriculture’s Animal Welfare Act. A drug sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available ex-U.S. clinical data or relevant literature, among other things, to the FDA as part of an IND. Some nonclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence. A clinical hold may occur at any time during the life of an IND and may affect one or more specific studies or all studies conducted under the IND.
Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug candidate has been associated with unexpected serious harm to patients.
Clinical Trials
Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial along with the requirement to ensure that the data and results reported from the clinical trials are credible and accurate. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the criteria for determining subject eligibility, the dosing plan, the parameters to be used in monitoring safety, the procedure for timely reporting of adverse events, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution.
Information about certain clinical trials and clinical trial results must be submitted within specific timeframes to the National Institutes of Health for public dissemination on the Clinicaltrials.gov registry. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties and prevent the non-compliant party from receiving future grant funds from the federal government. The government has begun enforcing these registration and results reporting requirements against non-compliant clinical trial sponsors.
Human clinical trials are typically conducted in at least three sequential phases and occasionally four or more, which may require repetition, or overlap or be combined:
Phase I: The drug candidate is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. During Phase I clinical trials, sufficient information about the investigational drug’s pharmacokinetics and pharmacological effects may be obtained to permit the design of well-controlled and scientifically valid Phase II clinical trials.
Phase II: The drug candidate is administered to a larger, but still limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted indications and to determine dosage tolerance and optimal dosage. Phase II clinical trials are typically well-controlled and closely monitored.
Phase III: The drug candidate is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product. Phase III clinical trials usually involve a larger number of participants than a Phase II clinical trial.
There is no guarantee that a clinical asset will successfully complete any such clinical trials. There is no assurance that any clinical trials on the assets owned or licensed by CDT will be successful.
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Interactions with FDA During the Clinical Development Program
Following the clearance of an IND and the commencement of clinical trials, the sponsor of such trial will continue to have interactions with the FDA. Progress reports detailing the results of clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product; and any clinically important increase in the occurrence of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.
In addition, sponsors are given opportunities to meet with the FDA at certain points in the clinical development program. Specifically, sponsors may meet with the FDA prior to the submission of an IND (“pre-IND meeting”), at the end of Phase II clinical trial (“EOP2” meeting) and before an NDA is submitted (“pre-NDA meeting”). Meetings at other times may also be requested. These meetings provide an opportunity for the sponsor to share information about the data gathered to date with the FDA and for the FDA to provide advice on the next phase of development. For example, at an EOP2, a sponsor may discuss its Phase II clinical results and present its plans for the pivotal Phase III clinical trial(s) that it believes will support the approval of the new product. Such meetings may be conducted in person, via teleconference/videoconference or written response only with minutes reflecting the questions that the sponsor posed to the FDA and the agency’s responses. The FDA has indicated that its responses, as conveyed in meeting minutes and advice letters, only constitute recommendations and/or advice made to a sponsor and, as such, sponsors are not bound by such recommendations and/or advice. Nonetheless, from a practical perspective, a sponsor’s failure to follow the FDA’s recommendations for design of a clinical program may put the program at significant risk of failure.
Acceptance of NDAs
Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, along with information relating to the product’s chemistry, manufacturing, controls, safety updates, patent information, abuse information and proposed labeling, are submitted to the FDA as part of an application requesting approval to market the clinical asset for one or more indications. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of a drug product. The fee required for the submission and review of an application under the Prescription Drug User Fee Act (“PDUFA”) is substantial, and the sponsor of an approved application is also subject to an annual program fee assessed based on eligible prescription drug products. These fees are typically adjusted annually, and exemptions and waivers may be available under certain circumstances, such as where a waiver is necessary to protect the public health, where the fee would present a significant barrier to innovation, or where the applicant is a small business submitting its first human therapeutic application for review.
The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the sponsor at that time or before whether an application is sufficiently complete to permit substantive review. In pertinent part, the FDA’s regulations provide that the agency may refuse to file an application if the application does not include all pertinent information and data necessary for review by the FDA. In the event that the FDA determines that an application does not satisfy this standard, it will issue a Refuse to File (“RTF”) determination to the applicant. Typically, an RTF will be based on administrative incompleteness, such as clear omission of information or sections of required information; scientific incompleteness, such as omission of critical data, information or analyses needed to evaluate safety and efficacy or provide adequate directions for use; or inadequate content, presentation, or organization of information such that substantive and meaningful review is precluded. The FDA may request additional information rather than accept an application for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing.
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Review of NDAs
After the submission is accepted for filing, the FDA begins an in-depth substantive review of the application. The FDA reviews the application to determine, among other things, whether the proposed product is safe and effective for its intended use, whether it has an acceptable purity profile and whether the product is being manufactured in accordance with cGMP.
Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months from the filing date in which to complete its initial review of a standard application that is a new molecular entity, and six months from the filing date for an application with “priority review.” The review process may be extended by the FDA for three additional months to consider new information or in the case of a clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission. Despite these review goals, the NDA review process can be very lengthy, and it is not uncommon for FDA review of an application to extend beyond the PDUFA target action date. Most innovative drug products (other than biological products) obtain FDA marketing approval pursuant to an NDA submitted under Section 505(b)(1) of the FDCA, commonly referred to as a traditional or “full NDA.” In 1984, with passage of the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act, that established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs based on an innovator or “reference” product, Congress also enacted Section 505(b)(2) of the FDCA, which provides a hybrid pathway combining features of a traditional NDA and a generic drug application. Section 505(b)(2) enables the applicant to rely, in part, on the FDA’s prior findings of safety and efficacy data for an existing product, or published literature, in support of its application. Section 505(b)(2) NDAs may provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products that would require new clinical data to demonstrate safety or effectiveness. Section 505(b)(2) permits the filing of an NDA in which the applicant relies, at least in part, on information from studies made to show whether a drug is safe or effective that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use. A Section 505(b)(2) applicant may eliminate or reduce the need to conduct certain preclinical or clinical studies, if it can establish that reliance on studies conducted for a previously approved product is scientifically appropriate. The FDA may also require companies to perform additional studies or measurements, including nonclinical and clinical studies, to support the change from the approved product. The FDA may then approve the new clinical asset for all or some of the labeled indications for which the referenced product has been approved, as well as for any new indication for which the Section 505(b)(2) NDA applicant has submitted data.
In connection with its review of an application, the FDA will typically submit information requests to the applicant and set deadlines for responses thereto. The FDA will also conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether the manufacturing processes and facilities comply with GMPs. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and are adequate to assure consistent production of the product within required specifications.
The FDA also may inspect the sponsor and one or more clinical trial sites to assure compliance with IND and GCP requirements and the integrity of the clinical data submitted to the FDA. To ensure cGMP and GCP compliance by its employees and third-party contractors, an applicant may incur significant expenditure of time, money and effort in the areas of training, record keeping, production and quality control. The FDA generally accepts data from foreign clinical trials in support of an NDA if the trials were conducted under an IND. If a foreign clinical trial is not conducted under an IND, the FDA nevertheless may accept the data in support of an NDA if the study was conducted in accordance with GCPs and the FDA is able to validate the data through an on-site inspection, if deemed necessary. Although the FDA generally requests that marketing applications be supported by some data from domestic clinical trials, the FDA may accept foreign data as the sole basis for marketing approval if (1) the foreign data are applicable to the United States population and United States medical practice, (2) the studies were performed by clinical investigators with recognized competence, and (3) the data may be considered valid without the need for an on-site inspection or, if the FDA considers the inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
The FDA may also refer an application, including applications for novel clinical asset which present difficult questions of safety or efficacy, to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when making final decisions on approval.
Data from clinical trials are not always conclusive, and the FDA or its advisory committee may interpret data differently than the sponsor interprets the same data. The FDA may also re-analyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process or delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis or at all.
The FDA also may require submission of a risk evaluation and mitigation strategy (“REMS”) if it determines that a REMS is necessary to ensure that the benefits of the drug product outweigh its risks and to assure the safe use of the product. The REMS could include medication guides, physician communication plans, assessment plans and/or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools. The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis. If the FDA concludes a REMS is needed, the sponsor of the application must submit a proposed REMS and the FDA will not approve the application without a REMS.
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Decisions on NDAs
The FDA reviews an application to determine, among other things, whether the product is safe and whether it is effective for its intended use(s), with the latter determination being made on the basis of substantial evidence. The term “substantial evidence” is defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and responsibly be concluded by such experts that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.”
The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to establish effectiveness of a new product. Under certain circumstances, however, the FDA has indicated that a single trial with certain characteristics and additional information may satisfy this standard. This approach was subsequently endorsed by Congress in 1998 with legislation providing, in pertinent part, that “If [the FDA] determines, based on relevant science, that data from one adequate and well-controlled clinical investigation and confirmatory evidence (obtained prior to or after such investigation) are sufficient to establish effectiveness, the FDA may consider such data and evidence to constitute substantial evidence.” This modification to the law recognized the potential for the FDA to find that one adequate and well controlled clinical investigation with confirmatory evidence, including supportive data outside of a controlled trial, is sufficient to establish effectiveness. In December 2019, the FDA issued draft guidance further explaining the studies that are needed to establish substantial evidence of effectiveness, and in September 2023 it issued a draft guidance that complements the 2019 draft guidance. The FDA has not yet finalized either guidance.
After evaluating the application and all related information, including the advisory committee recommendations, if any, and inspection reports of manufacturing facilities and clinical trial sites, the FDA will issue either a Complete Response Letter (“CRL”) or an approval letter. To approve the application, the FDA must determine that the drug is effective and that its expected benefits outweigh its potential risks to patients. This “benefit-risk” assessment is informed by the extensive body of evidence about the product’s safety and efficacy in the NDA. This assessment is also informed by other factors, including: the severity of the underlying condition and how well patients’ medical needs are addressed by currently available therapies; uncertainty about how the premarket clinical trial evidence will extrapolate to real-world use of the product in the post-market setting; and whether risk management tools are necessary to manage specific risks. In connection with this assessment, the FDA review team will assemble all individual reviews and other documents into an “action package,” which becomes the record for FDA review. The review team then issues a recommendation, and a senior FDA official makes a decision.
A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. The CRL may require additional clinical or other data, additional pivotal Phase III clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. If a CRL is issued, the applicant will have one year to respond to the deficiencies identified by the FDA, at which time the FDA can deem the application withdrawn or, in its discretion, grant the applicant an additional six-month extension to respond. The FDA has committed to reviewing resubmissions in response to an issued CRL in either two or six months depending on the type of information included. Even with the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
An approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing information for specific indications. That is, the approval will be limited to the conditions of use (e.g., patient population, indication) described in the FDA-approved labeling. Further, depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in the product labeling, require that post-approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety after approval, require testing and surveillance programs to monitor the product after commercialization or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing trials or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.
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Special FDA Expedited Review Programs
The FDA is authorized to designate certain products for expedited development or review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs include fast track designation, breakthrough therapy designation, and priority review designation. The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures.
To be eligible for a fast-track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. Fast track designation provides additional opportunities for interaction with the FDA’s review team and may allow for a rolling review of NDA components before the completed application is submitted. If the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA. In addition, fast track designation may be withdrawn by the sponsor or rescinded by the FDA if the designation is no longer supported by data emerging in the clinical trial process.
In addition, with the enactment of the FDA Safety and Innovation Act (“FDASIA”) in 2012, Congress created a new regulatory program for therapeutic candidates designated by FDA as “breakthrough therapies” upon a request made by the IND sponsors. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA must take certain actions with respect to breakthrough therapies, such as holding timely meetings with and providing advice to the product sponsor, intended to expedite the development and review of an application for approval of a breakthrough therapy.
Finally, the FDA may designate a product for priority review if it is a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. The FDA determines at the time that the marketing application is submitted, on a case-by-case basis, whether the proposed drug represents a significant improvement in treatment, prevention or diagnosis of disease when compared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation. A priority review designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months for an NDA for a new molecular entity from the date of filing.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Furthermore, fast track designation, breakthrough therapy designation and priority review do not change the standards for approval and may not ultimately expedite the development or approval process.
Accelerated Approval Pathway
In addition, a product studied for its safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, meaning that it may be approved on (i) the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or (ii) on an intermediate clinical endpoint that can be measured earlier than irreversible morbidity or mortality (“IMM”) and that is reasonably likely to predict an effect on IMM or other clinical benefits, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on IMM or other clinical endpoints, and the drug may be subject to expedited withdrawal procedures. Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit. As a result, a therapeutic candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to confirm the predicted clinical benefit of the product during post-marketing studies, would allow the FDA to withdraw approval of the drug. All promotional materials for drug products being considered and approved under the accelerated approval program are subject to prior review by the FDA. Lawmakers, FDA officials, and other stakeholders continually evaluate the accelerated approval program which may lead to legislative and/or administrative changes in the future.
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Post-Approval Requirements
Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. Certain modifications to the product, including changes in indications or manufacturing processes or facilities, may require the applicant to develop additional data or conduct additional preclinical studies and clinical trials to support the submission to FDA. As previously noted, there also are continuing, annual user fee requirements for any marketed products, as well as new application fees for supplemental applications with clinical data.
The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.
In addition, FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMPs. The cGMP regulations include requirements relating to the organization of personnel, buildings and facilities, equipment, control of components and drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and some state agencies and are subject to periodic unannounced inspections by the FDA for compliance with cGMP requirements and other laws. Changes to the manufacturing process are strictly regulated and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers. Accordingly, manufacturers must continue to expend time, money, and effort in production and quality control to maintain compliance with cGMP and other aspects of quality control and quality assurance.
The FDA strictly regulates the marketing, labeling, advertising and promotion of drug products that are placed on the market. A product cannot be commercially promoted before it is approved, and approved drugs may generally be promoted only for their approved indications and for use in patient populations described in the product’s approved labeling. Promotional claims must also be consistent with the product’s FDA-approved label, including claims related to safety and effectiveness. The government closely scrutinizes the promotion of prescription drugs in specific contexts such as direct-to-consumer advertising, industry-sponsored scientific and educational activities, and promotional activities involving the Internet and social media. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences of regulatory non-compliance include, among other things:
| ● | restrictions on, or suspensions of, the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; | |
| ● | interruption of production processes, including the shutdown of manufacturing facilities or production lines or the imposition of new manufacturing requirements; | |
| ● | fines, warning letters or other enforcement letters or clinical holds on post-approval clinical trials; | |
| ● | mandated modification of promotional materials and labeling and the issuance of corrective information; | |
| ● | refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; | |
| ● | product seizure or detention, or refusal to permit the import or export of products; | |
| ● | injunctions or the imposition of civil or criminal penalties; or | |
| ● | consent decrees, corporate integrity agreements, debarment, or exclusion from federal healthcare programs. |
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In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act (“PDMA”) which regulates the distribution of drugs and drug samples at the federal level and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. The Drug Supply Chain Security Act (the “DSCSA”), was enacted with the aim of building an electronic system to identify and trace certain prescription drugs distributed in the United States. The DSCSA mandated phased-in and resource-intensive obligations for pharmaceutical manufacturers, wholesale distributors and dispensers by November 2023, but so as not to disrupt supply chains, the FDA has granted certain exemptions from enhanced drug distribution security requirements for eligible trading partners for particular periods of time. From time to time, new legislation and regulations may be implemented that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. For example, the FDA released proposed regulations in February 2022 to amend the national standards for licensing of wholesale drug distributors by the states; establish new minimum standards for state licensing third-party logistics providers; and create a federal system for licensure for use in the absence of a state program, each of which is mandated by the DSCSA. It is impossible to predict whether further legislative or regulatory changes will be enacted, or FDA regulations, guidance or interpretations will be changed or what the impact of such potential changes, if any, may be.
Regulatory Exclusivity and Approval of Follow-on Products
Hatch-Waxman Exclusivity
In addition to enacting Section 505(b)(2) of the FDCA as part of the Hatch-Waxman Amendments to the FDCA, Congress also established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs that are shown to contain the same active ingredients as, and to be bioequivalent to, drugs previously approved by the FDA pursuant to NDAs. To obtain approval of a generic drug, an applicant must submit an abbreviated new drug application (“ANDA”) to the agency. An ANDA is a comprehensive submission that contains, among other things, data and information pertaining to the active pharmaceutical ingredient, bioequivalence, drug product formulation, specifications and stability of the generic drug, as well as analytical methods, manufacturing process validation data and quality control procedures. ANDAs are “abbreviated” because they cannot include preclinical and clinical data to demonstrate safety and effectiveness. Instead, in support of such applications, a generic manufacturer must rely on the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the reference listed drug (“RLD”).
In order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, the strength of the drug and the conditions of use of the drug. At the same time, the FDA must also determine that the generic drug is “bioequivalent” to the innovator drug. Under the statute, a generic drug is bioequivalent to an RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.” Unlike the 505(b)(2) NDA pathway that permits a follow-on applicant to conduct and submit data from additional clinical trials or nonclinical studies in order to support the proposed change(s) to the reference product, the ANDA regulatory pathway does not allow applicants to submit new clinical data other than bioavailability or bioequivalence data.
Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book.” Physicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD. In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the prescribing physician or patient.
As part of the NDA review and approval process, applicants are required to list with the FDA each patent that has claims that cover the applicant’s product or method of therapeutic use. Upon approval of a new drug, each of the patents listed in the application for the drug is then published in the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential follow-on competitors in support of approval of an ANDA or 505(b)(2) NDA.
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When an ANDA applicant submits its application to the FDA, it is required to certify to the FDA concerning any patents listed for the reference product in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. Moreover, to the extent that the Section 505(b)(2) NDA applicant is relying on studies conducted for an already approved product, the applicant also is required to certify to the FDA concerning any patents listed for the NDA-approved product in the Orange Book to the same extent that an ANDA applicant would.
If the follow-on applicant does not challenge the innovator’s listed patents, the FDA will not approve the ANDA or 505(b)(2) application until all the listed patents claiming the referenced product have expired. A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV certification. If the follow-on applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA or 505(b)(2) applicant.
An ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivities listed in the Orange Book for the referenced product have expired. The Hatch-Waxman Amendments to the FDCA provided a five-year period of non-patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity (“NCE”). For the purposes of this provision, an NCE is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA. An active moiety is the molecule or ion responsible for the physiological or pharmacological action of the drug substance. In cases where such NCE exclusivity has been granted, an ANDA or 505(b)(2) NDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification, in which case the applicant may submit its application four years following the original product approval.
The FDCA also provides for a period of three years of data exclusivity if an NDA or NDA supplement includes reports of one or more new clinical investigations, other than bioavailability or bioequivalence studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application. This three-year exclusivity period often protects changes to a previously approved drug product, such as new indications, dosage forms, route of administration or combination of ingredients. Three-year exclusivity would be available for a drug product that contains a previously approved active moiety, provided the statutory requirement for a new clinical investigation is satisfied. Unlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product; rather, this three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving follow-on applications for drugs containing the original active ingredient.
Five-year and three-year exclusivity also will not delay the submission or approval of a traditional NDA filed under Section 505(b)(1) of the FDCA; however, an applicant submitting a traditional NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Orphan Drug Designation and Exclusivity
Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is generally a disease or condition that affects either (i) fewer than 200,000 individuals in the United States, or (ii) more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug. Legislative proposals are currently being considered that would revise or revoke the second option available for a drug candidate to receive an orphan designation, the so-called “cost recovery” pathway. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use will be disclosed publicly by the FDA; the posting will also indicate whether a drug is no longer designated as an orphan drug.
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More than one clinical asset may receive an orphan drug designation for the same indication, and the same clinical asset can be designated for more than one qualified orphan indication. The benefits of orphan drug designation include research and development tax credits and exemption from FDA prescription drug user fees. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process if or when an NDA for the drug candidate is filed.
If a product that has orphan drug designation subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to orphan product exclusivity, which means that for seven years, the FDA may not approve any other marketing applications for the same drug for the same indication, except under limited circumstances described further below. Orphan exclusivity does not block the approval of a different drug for the same rare disease or condition, nor does it block the approval of the same drug for different conditions. As a result, the FDA can still approve different drugs for use in treating the same indication or disease. Additionally, if a drug designated as an orphan product receives marketing approval for an indication broader than what was designated, it may not be entitled to orphan drug exclusivity.
Orphan exclusivity will not bar approval of another product with the same drug for the same condition under certain circumstances, including if a subsequent product with the same drug for the same condition is shown to be clinically superior to the approved product on the basis of greater efficacy or safety or a major contribution to patient care, or if the company with orphan drug exclusivity cannot assure the availability of sufficient quantities of the drug to meet the needs of persons with the disease or condition for which the drug was designated. The FDA is now required to publish a summary of the clinical superiority findings when a drug is eligible for orphan product exclusivity on the basis of a demonstration of clinical superiority.
Patent Term Extension
A patent claiming a prescription drug for which FDA approval is granted may be eligible for a limited patent term extension under the FDCA, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review provided that certain statutory and regulatory requirements are met. The length of the patent term extension is related to the length of time the drug is under regulatory review while the patent is in force. The restoration period granted on a patent covering a new FDA-regulated medical product is typically one-half the time between the date a clinical investigation on human beings is begun and the submission date of an application for premarket approval of the product, plus the time between the submission date of an application for approval of the product and the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple products for which approval is sought can only be extended in connection with one of the marketing approvals. The USPTO reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
Other U.S. Healthcare Laws and Regulations
Manufacturing, sales, promotion, and other activities following product approval may also be subject to regulation by other regulatory authorities in the United States in addition to the FDA. Depending on the nature of the product, those authorities may include the Centers for Medicare and Medicaid Services (“CMS”), other divisions of the Department of Health and Human Services (“HHS”), the Department of Justice, the Drug Enforcement Administration, the Federal Trade Commission, the Occupational Safety and Health Administration, and state and local governments.
For example, in the United States, sales and marketing for prescription biopharmaceutical products must comply with state and federal fraud and abuse laws. These laws include the federal Anti-Kickback Statute, which makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce or reward referrals, including the purchase, recommendation, order or prescription of a particular drug, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. Violations of this law are punishable by up to ten years in prison, criminal fines, administrative civil money penalties and exclusion from participation in federal healthcare programs. In addition, the Patient Protection and Affordable Care Act, or ACA, among other things, amended the intent requirement of the federal Anti-Kickback Statute and two of the five criminal healthcare fraud statutes created by the Health Insurance Portability and Accountability Act of 1996, or HIPAA. A person or entity no longer needs to have actual knowledge of these two provisions in the statute or specific intent to violate them; specifically with respect to the prohibition on executing or attempting to execute a scheme or artifice to defraud or to fraudulently obtain money or property of any healthcare benefit program and the prohibition on disposing of assets to enable a person to become eligible for Medicaid. Moreover, the government may now assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
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Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990 and more recent requirements in the ACA. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. There also are federal transparency requirements under the Physician Payments Sunshine Act that require manufacturers of FDA-approved drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to CMS information related to payments and other transfers of value to physicians, teaching hospitals, and certain advanced non-physician healthcare practitioners and physician ownership and investment interests. Prescription drug products also must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act.
Manufacturing, sales, promotion, and other activities also are potentially subject to federal and state consumer protection and unfair competition laws. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, or the relevant compliance guidance promulgated by the federal government, in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures to the extent that those laws impose requirements that are more stringent than the Physician Payments Sunshine Act. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
The failure to comply with any of these laws or regulatory requirements subjects firms to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, requests for recall, seizure of products, total or partial suspension of production, denial or withdrawal of product approvals or refusal to allow a firm to enter into supply contracts, including government contracts.
Government Regulation Outside the U.S.
In addition to regulations in the United States, we will be subject to a variety of foreign regulations that govern, among other things, clinical trials and any commercial sales and distribution of our products, if approved, either directly or through distribution partners. Whether or not we obtain FDA approval for a product candidate, we must obtain the requisite approvals from regulatory authorities in foreign countries or economic areas, such as the European Union and the United Kingdom, among other foreign countries, before we may commence clinical trials or market products in those countries or areas. The foreign regulatory approval process includes all of the risks associated with the FDA approval described above, and the time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Some foreign jurisdictions have a drug product approval process similar to that in the U.S., which requires the submission of a clinical trial application much like the IND prior to the commencement of clinical studies. In Europe, for example, a clinical trial application, or CTA, must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed. To obtain regulatory approval of a medicinal product candidate under European Union regulatory systems, we would be required to submit a Marketing Authorisation Application, or MAA, which is similar to the NDA, except that, among other things, there are country-specific document requirements. For countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, and recently the United Kingdom, the requirements governing the conduct of clinical trials, product approval, pricing and reimbursement vary from country to country. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others. Moreover, some nations may not accept clinical studies performed for U.S. approval to support approval in their countries or require that additional studies be performed on natives of their countries. In addition, in certain foreign markets, the pricing of drug products is subject to government control and reimbursement may in some cases be unavailable or insufficient. If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.
As of January 31, 2020, the United Kingdom is no longer a member state of the European Union, and therefore a separate marketing authorization application and approval will be required to market a medicinal product in the U.K. The Medicines and Healthcare products Regulatory Agency, or the MHRA, is the U.K.’s standalone pharmaceutical regulator.
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Clinical Trials and Regulation of Medicinal Products in Europe
As in the United States, medicinal products can be marketed in the European Union only if a marketing authorization from the competent regulatory agencies has been obtained. Similar to the United States, the various phases of preclinical and clinical research in the European Union are subject to significant regulatory controls.
Pursuant to the European Clinical Trials Directive, a system for the approval of clinical trials in the European Union has been implemented through national legislation of the member states. Under this system, an applicant must obtain approval from the competent national authority of a European Union member state in which the clinical trial is to be conducted. Furthermore, the applicant may only start a clinical trial after a competent ethics committee has issued a favorable opinion. Clinical trial applications must be accompanied by an investigational medicinal product dossier with supporting information prescribed by the European Clinical Trials Directive and corresponding national laws of the member states and further detailed in applicable guidance documents. In April 2014, the new Clinical Trials Regulation, (EU) No 536/2014 (Clinical Trials Regulation) was adopted and became effective on January 31, 2022. The Clinical Trials Regulation is directly applicable in all the European Union Member States, repealing the prior Clinical Trials Directive 2001/20/EC. The extent to which ongoing clinical trials will be governed by the Clinical Trials Regulation will depend on the duration of the individual clinical trial; if a clinical trial continues for more than three years from the day on which the Clinical Trials Regulation becomes applicable the Clinical Trials Regulation will at that time begin to apply to the clinical trial.
The new Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the European Union. The main characteristics of the regulation include: a streamlined application procedure via a single entry point; a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors; and a harmonized procedure for the assessment of applications for clinical trials.
To obtain marketing approval of a drug in the European Union, an applicant must submit a MAA either under a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid for all European Union member states, Iceland, Lichtenstein and Norway. The centralized procedure is compulsory for specific products, including for medicines produced by certain biotechnological processes, products designated as orphan medicinal products, advanced therapy products (such as gene-therapy, somatic cell-therapy or tissue-engineered medicines) and products with a new active substance indicated for the treatment of certain disorders. For products with a new active substance indicated for the treatment of certain disorders and products that are highly innovative or for which a centralized process is in the interest of patients, the centralized procedure may be optional. Under the centralized procedure the maximum timeframe for the evaluation of an MAA by the European Medicines Agency (“EMA”) is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products for Human Use (“CHMP”). Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation. The timeframe for the evaluation of an MAA under the accelerated assessment procedure is of 150 days, excluding stop-clocks.
The decentralized procedure is available to applicants who wish to market a product in specific European Union member states where such product has not received marketing approval in any European Union member states before. The decentralized procedure provides for an applicant to apply to one-member state to assess the application (the reference member state) and specifically list other member states in which it wishes to obtain approval (concerned member states).
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In the European Union, only products for which marketing authorizations have been granted may be promoted. A marketing authorization is valid for five years in principle and the marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To this end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least six months before the marketing authorization ceases to be valid. Once renewed, the marketing authorization is valid for an unlimited period, unless the European Commission or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal. Any authorization which is not followed by the actual placing of the drug on the European Union market (in case of centralized procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid (the so-called sunset clause).
Moreover, even if authorized to be marketed in the European Union, prescription medicines may only be promoted to healthcare professionals, not the general public. All promotion should be in accordance with the particulars listed in the summary of product characteristics. Promotional materials must also comply with various laws, and codes of conduct developed by pharmaceutical industry bodies in the European Union which govern (among other things) the training of sales staff, promotional claims and their justification, comparative advertising, misleading advertising, endorsements, and (where permitted) advertising to the general public. Failure to comply with these requirements could lead to the imposition of penalties by the competent authorities of the European Union member states. The penalties could include warnings, orders to discontinue the promotion of the drug product, seizure of promotional materials, fines and possible imprisonment.
Regulation of New Drugs in the United Kingdom
The United Kingdom left the European Union on January 31, 2020 (commonly referred to as “Brexit”), with a transitional period that expired on December 31, 2020. The United Kingdom and the European Union entered into a trade agreement known as the Trade and Cooperation Agreement, which went into effect on January 1, 2021. We are currently evaluating the potential impacts on our business of the Trade and Cooperation Agreement and guidance issued to date by the United Kingdom’s MHRA regarding the requirements for licensing and marketing medicinal products in the United Kingdom.
Since the regulatory framework for pharmaceutical products in the United Kingdom covering the quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of medicinal products has only recently changed, it is difficult to draw comparisons about the impact of the new regulatory regime and impact on the approval of product candidates in the United Kingdom. In addition, even if a drug is licensed in the UK by the MHRA, it must further be approved by the National Institute for Health & Care Excellence to ensure use within the UK’s National Health Service (NHS).
Pharmaceutical Coverage, Pricing and Reimbursement, and Healthcare Reform
Sales of our products, if approved for marketing, will depend, in part, on the availability and extent of coverage and reimbursement by third-party payors, such as government health programs, including Medicare and Medicaid, commercial insurance and managed healthcare organizations. These third-party payors are increasingly challenging the price and limiting the coverage and reimbursement amounts for medical products and services. There may be significant delays in obtaining coverage and reimbursement for approved products, and coverage may be more limited than the purposes for which the product is approved by the FDA or regulatory authorities in other countries. It is time-consuming and expensive to seek reimbursement from third-party payors. Moreover, eligibility for reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Payment rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed for lower-cost products that are already reimbursed and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by third-party payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices than in the United States. In the United States, third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies, but they also have their own methods and approval process apart from Medicare coverage and reimbursement determinations. Accordingly, one third-party payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product.
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In addition, the containment of healthcare costs has become a priority for federal and state governments, and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement, and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our clinical assets or a decision by a third-party payor to not cover our clinical assets could reduce physician usage of the clinical asset and have a material adverse effect on our sales, results of operations and financial condition. Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In December 2020, the U.S. Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers (“PBMs”) and other members of the healthcare and pharmaceutical supply chain, an important decision that has led to further and more aggressive efforts by states in this area.
On August 16, 2022, President Biden signed into the law the Inflation Reduction Act of 2022, or the IRA. Among other things, the IRA has multiple provisions that can impact the prices of drug products that are both sold into the Medicare program and throughout the United States. Beginning in 2023, a manufacturer of drugs covered by Medicare Parts B or D must pay a rebate to the federal government if their drug product’s price increases faster than the rate of inflation. This calculation is made on a drug product by drug product basis and the amount of the rebate owed to the federal government is directly dependent on the volume of a drug product that is paid for by Medicare Parts B or D. Additionally, starting for payment year 2026, CMS will negotiate drug prices annually for a select number of single source Part D drugs without generic or biosimilar competition. CMS will also negotiate drug prices for a select number of Part B drugs starting for payment year 2028. If a drug product is selected by CMS for negotiation, it is expected that the revenue generated from such drug will decrease.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, in the European Union, the sole legal instrument at the European Union level governing the pricing and reimbursement of medicinal products is Council Directive 89/105/EEC (the “Price Transparency Directive”). The aim of the Price Transparency Directive is to ensure that pricing and reimbursement mechanisms established in the European Union Member States are transparent and objective, do not hinder the free movement of and trade in medicinal products in the European Union, and do not hinder, prevent or distort competition on the market. The Price Transparency Directive does not provide any guidance concerning the specific criteria on the basis of which pricing and reimbursement decisions are to be made in the individual European Union Member States, nor does it have any direct consequence for pricing or reimbursement levels in the individual European Union Member States. The European Union Member States are free to restrict the range of medicinal products for which their national health insurance systems provide reimbursement, and to control the prices and/or reimbursement levels of medicinal products for human use. A European Union Member State may approve a specific price or level of reimbursement for the medicinal product or alternatively adopt a system of direct or indirect controls on the profitability of the company responsible for placing the medicinal product on the market, including volume-based arrangements, caps and reference pricing mechanisms.
Health Technology Assessment (“HTA”) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some European Union Member States, including France, Germany, Ireland, Italy and Sweden. The HTA process in the European Union Member States is governed by the national laws of these countries. HTA is the procedure according to which the assessment of the public health impact, therapeutic impact, and the economic and societal impact of the use of a given medicinal product in the national healthcare systems of the individual country is conducted. HTA generally focuses on the clinical efficacy and effectiveness, safety, cost, and cost-effectiveness of individual medicinal products as well as their potential implications for the healthcare system. Those elements of medicinal products are compared with other treatment options available on the market. The outcome of HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual European Union Member States. The extent to which pricing and reimbursement decisions are influenced by the HTA of the specific medicinal product vary between the European Union Member States. For example, European Union Member States that have not yet developed HTA mechanisms could rely to some extent on the HTA performed in countries with a developed HTA framework when adopting decisions concerning the pricing and reimbursement of a specific medicinal product.
Separately from cost containment efforts, in the United States and some foreign jurisdictions, there also have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates or restrict or regulate post-approval activities. The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our current or future product candidates.
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Data Privacy and the Protection of Personal Information
We are subject to laws and regulations governing data privacy and the protection of personal information including health information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues which will continue to affect our business. In the United States, we may be subject to state security breach notification laws, state laws protecting the privacy of health and personal information and federal and state consumer protections laws that regulate the collection, use, disclosure and transmission of personal information. These laws overlap and often conflict and each of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues. If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties. Our customers and research partners must comply with laws governing the privacy and security of health information, including HIPAA and state health information privacy laws. If we knowingly obtain health information that is protected under HIPAA, called “protected health information,” our customers or research collaborators may be subject to enforcement, and we may have direct liability for the unlawful receipt of protected health information or for aiding and abetting a HIPAA violation.
State laws protecting health and personal information are becoming increasingly stringent. For example, California has implemented the California Confidentiality of Medical Information Act that imposes restrictive requirements regulating the use and disclosure of health information and other personally identifiable information, and California has recently adopted the California Consumer Privacy Act of 2018 (“CCPA”). The CCPA mirrors a number of the key provisions of the EU General Data Protection Regulation (“GDPR”) described below. The CCPA establishes a new privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches. Since passage of the CCPA, several other states (Connecticut, Colorado, Virginia, and Utah) have also enacted comprehensive consumer privacy laws that include key differences from California’s law, further complicating compliance by industry and other stakeholders. Other states in the U.S. are considering privacy laws similar to the CCPA.
In Europe, the GDPR went into effect in May 2018, implementing a broad data protection framework that expanded the scope of European Union data protection law, including to non- European Union entities that process, or control the processing of, personal data relating to individuals located in the European Union, including clinical trial data. The GDPR sets out a number of requirements that must be complied with when handling the personal data of European Union-based data subjects including: providing expanded disclosures about how their personal data will be used; higher standards for organizations to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities; the obligation to appoint data protection officers in certain circumstances; new rights for individuals to be “forgotten” and rights to data portability, as well as enhanced current rights (e.g. access requests); the principal of accountability and demonstrating compliance through policies, procedures, training and audit; and a new mandatory data breach regime. In particular, medical or health data, genetic data and biometric data where the latter is used to uniquely identify an individual are all classified as “special category” data under the GDPR and afforded greater protection and require additional compliance obligations. Further, European Union member states have a broad right to impose additional conditions – including restrictions – on these data categories. This is because the GDPR allows European Union member states to derogate from the requirements of the GDPR mainly in regard to specific processing situations (including special category data and processing for scientific or statistical purposes). As the European Union states continue to reframe their national legislation to harmonize with the GDPR, we will need to monitor compliance with all relevant European Union member states’ laws and regulations, including where permitted derogations from the GDPR are introduced. We will also be subject to evolving European Union laws on data export, if we transfer data outside the European Union to ourselves or third parties outside of the European Union.
The EU GDPR is an EU Regulation and it no longer applies to the UK. If you operate inside the UK, you need to comply with the Data Protection Act 2018 (DPA 2018). The provisions of the EU GDPR have been incorporated directly into UK law as the UK GDPR. On 28 June 2021, the EU approved adequacy decisions for the EU GDPR and the Law Enforcement Directive (LED). This means data can continue to flow freely from the EU to the UK, in the majority of cases.
The Cayman Islands Government enacted the Data Protection Act on May 18, 2017 (as amended, the “DPA”). The DPA regulates the processing of personal data in the Cayman Islands. Under the DPA, the Company is a “data controller” and the Company’s affiliates and/or its delegates may be “data processors” (or, in some circumstances, data controllers in their own right), in respect of such personal data.
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U.S. Foreign Corrupt Practices Act and Anti-bribery Regulations
In general, the Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, prohibits offering to pay, paying, promising to pay, or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business for or with, or in order to direct business to, any person. The prohibitions apply not only to payments made to “any foreign official,” but also to those made to “any foreign political party or official thereof,” to “any candidate for foreign political office” or to any person, while knowing that all or a portion of the payment will be offered, given, or promised to anyone in any of the foregoing categories. “Foreign officials” under the FCPA include officers or employees of a department, agency, or instrumentality of a foreign government. The term “instrumentality” is broad and can include state-owned or state-controlled entities. Importantly, United States authorities deem most healthcare professionals and other employees of foreign hospitals, clinics, research facilities and medical schools in countries with public healthcare and/or public education systems to be “foreign officials” under the FCPA. When we interact with foreign healthcare professionals and researchers in testing and marketing our products abroad, should any of our product candidates receive foreign regulatory approval in the future, we must have policies and procedures in place sufficient to prevent us and agents acting on our behalf from providing any bribe, gift or gratuity, including excessive or lavish meals, travel or entertainment in connection with marketing our products and services or securing required permits and approvals. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
We are also subject to U.K. Bribery Act of 2010, which prohibits both domestic and international bribery, as well as bribery across both private and public sectors. In addition, an organization that “fails to prevent bribery” committed by anyone associated with the organization can be charged under the U.K. Bribery Act unless the organization can establish the defense of having implemented “adequate procedures” to prevent bribery. As we expand our operations, we are likely to be subject to additional laws and restrictions relating to anti-bribery.
Environmental, Health, and Safety Regulation
We are subject to numerous federal, state, and local environmental, health, and safety (“EHS”) laws and regulations relating to, among other matters, safe working conditions, product stewardship, environmental protection, and handling or disposition of products, including those governing the generation, storage, handling, use, transportation, release, and disposal of hazardous or potentially hazardous materials, medical waste, and infectious materials that may be handled by our partner research laboratories. Some of these laws and regulations also require us to obtain licenses or permits to conduct our operations. If we fail to comply with such laws or obtain and comply with the applicable permits, we could face substantial fines or possible revocation of our permits or limitations on our ability to conduct our operations. Certain of our development and manufacturing activities may involve, from time to time, use of hazardous materials, and we believe we are in compliance with the applicable environmental laws, regulations, permits, and licenses. However, we cannot ensure that EHS liabilities will not develop in the future. EHS laws and regulations are complex, change frequently and have tended to become more stringent over time. Although the costs to comply with applicable laws and regulations have not been material, we cannot predict the impact on our business of new or amended laws or regulations or any changes in the way existing and future laws and regulations are interpreted or enforced, nor can we ensure we will be able to obtain or maintain any required licenses or permits.
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Employees
As of December 31, 2025, we had a total of four full-time employees.
We currently rely on several consultants who provide services to our Company. None of our employees are represented by a labor union or covered by collective bargaining agreements. We consider our relationship with our employees to be good. We anticipate that the number of employees will increase as we continue to develop the assets in our pipeline and other clinical assets that we seek to develop. Additionally, we utilize and expect to continue to utilize clinical research organizations and third parties to perform our pre-clinical studies, clinical studies, and manufacturing.
Corporate Information
We were incorporated under the name “Murphy Canyon Acquisition Corp.” in October 2021 under the laws of the State of Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We changed our name to “Conduit Pharmaceuticals Inc.” in connection with the completion of the Business Combination in September 2023. Effective August 5, 2025, the Company changed its name from Conduit Pharmaceuticals Inc. to CDT Equity Inc. Our change to CDT Equity Inc. reflects the evolution of our strategy as a data-driven biotech development company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships.
Our principal executive offices are located at 4581 Tamiami Trail North, Suite 200 Naples, Florida. Our telephone number is +1 (646)-491-9132, and our website can be found at https://www.cdtequity.com.
Item 1A. Risk Factors
An investment in our securities involves a high degree of risk. Investors should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could decline due to any of these risks, and, as a result, stockholders may lose all or part of their investment. Certain statements in “Risk Factors” are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
Risks Related to Our Business and Industry
We have incurred significant net losses since our inception and we anticipate future losses and negative cash flow. It is uncertain if or when we will become profitable.
We have incurred net losses since our inception. Our net losses were $39.2 million for the year ended December 31, 2025, and $17.8 million for the year ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $68.3 million. We do not expect to generate any significant revenues, if any, until we successfully complete adequate development of our first clinical asset. As of December 31, 2025, our clinical assets are still in development and have not been approved by the FDA or any other regulatory body.
We have not yet demonstrated our ability to generate revenue, and we may never be able to produce revenues or operate on a profitable basis. We expect to experience operating losses and negative cash flow for the foreseeable future. Even if we are able to commercialize our technology, which may include licensing, we may never recover our research and development expenses.
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Our business is dependent on the successful development, regulatory approval, and commercialization of our clinical assets, in particular a glucokinase activator which we believe is active in a range of autoimmune disorders, which we refer to as AZD1656, and a potent, irreversible inhibitor of human Myeloperoxidase that has the potential to treat idiopathic male infertility, which we refer to as AZD5904.
The success of our business, including our ability to finance our operations and generate any revenue in the future, will primarily depend on the successful development, regulatory approval, and commercialization or partnering of our clinical assets. In the future, we may also become dependent on just one of our clinical assets or any future clinical assets that we may in-license, acquire, or develop. The preclinical, clinical and commercial success of our clinical assets will depend on a number of factors, including the following:
| ● | the ability to raise additional capital to fund our current pre-clinical and clinical plans on acceptable terms, or at all; | |
● |
the timely completion of our clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; | |
| ● | the success that Manoira has in evaluating the CDT Assets’ applicability in animal health, explore veterinary market opportunities related to AZD1656; | |
| ● | whether we are required by the FDA or similar foreign regulatory agencies to conduct additional preclinical or clinical trials beyond those planned to support the approval and commercialization of our clinical assets or any future clinical assets; | |
| ● | the acceptance of our proposed indications and primary endpoint assessments relating to the proposed indications of our clinical assets by the FDA or similar foreign regulatory authorities; | |
| ● | our ability to demonstrate the safety and efficacy of our clinical assets or any future clinical assets to the satisfaction of the FDA and similar foreign regulatory authorities; | |
| ● | the prevalence, duration, and severity of potential side effects experienced in connection with our clinical assets or future approved products, if any; |
| ● | the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; | |
| ● | achieving and maintaining, and, where applicable, ensuring that our third-party contractors achieve and maintain compliance with our contractual obligations and with all regulatory requirements applicable to our clinical assets or any future clinical assets or approved products, if any; | |
| ● | the ability of third parties with whom we contract to manufacture clinical trial and commercial supplies of our clinical assets or any future clinical assets, remain in good standing with regulatory agencies, and develop, validate, and maintain commercially viable manufacturing processes that are compliant with cGMP; | |
| ● | a continued acceptable safety profile during preclinical and clinical development and following approval of our clinical assets or any future clinical assets; | |
| ● | our ability to successfully commercialize our clinical assets or any future clinical assets in the U.S. and internationally, if approved for marketing, sale, and distribution in such countries and territories, whether alone or in collaboration with others; | |
| ● | the acceptance by physicians, patients, and payors of the benefits, safety, and efficacy of our clinical assets or any future clinical assets, if approved, including relative to alternative and competing treatments; | |
| ● | our ability to comply with numerous post-approval regulatory requirements; | |
| ● | our and our partners’ ability to establish and enforce intellectual property rights in and to our clinical assets or any future clinical assets; | |
| ● | our and our partners’ ability to avoid third-party patent interference or intellectual property infringement claims; and | |
| ● | our ability to in-license or acquire additional clinical assets or commercial-stage products that we believe can successfully develop and commercialize. |
If we are unable to achieve one or more of the above factors, many of which are beyond our control, in a timely manner or at all, we could experience significant delays and increased costs or an inability to obtain regulatory approvals or commercialize our clinical assets. Even if regulatory approvals are obtained, we may never be able to successfully commercialize any of our clinical assets. Accordingly, we cannot assure investors that we will be able to generate sufficient revenue through the sale of our clinical assets or any future clinical assets to continue operations.
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There is substantial doubt regarding our ability to continue as a going concern. We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our commercial programs, product development efforts or other operations.
The report of our independent registered public accounting firm on the Company’s financial statements as of and for the year ended December 31, 2025, includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern for at least one year from the date of filing. Through the date of the Business Combination, Old Conduit financed its working capital requirements by raising capital through private placements of its ordinary shares and issuing of short-term and convertible notes. The Company has financed its working capital requirements since the Business Combination primarily through the PIPE Financing (the “PIPE Financing”) completed in September 2023, and through issuing of short-term and convertible notes, and via an at the market program with A.G.P./Alliance Global Partners.
We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our commercial programs, product development efforts or other operations. We do not expect to generate meaningful product revenues in the foreseeable future. Based on our current business plan as of the date of our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, there is substantial doubt regarding our ability to continue as a going concern. We will need to raise additional funding in order to execute on our current business plans and strategy, including prior to becoming profitable.
Our efforts to raise additional funding may divert our management from their day-to-day activities, which may adversely affect our ability to develop our products. In addition, we cannot guarantee that financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
Moreover, as a result of recent volatile market conditions, the cost and availability of capital has been and may continue to be adversely affected. Concern about the stability of the banking sector has generally led many lenders and institutional investors to reduce, and in some cases, cease to provide credit to businesses and consumers. Continued turbulence in the U.S. market and economy may adversely affect our liquidity and financial condition, including our ability to access the capital markets to meet liquidity needs.
If we are unable to obtain funding on a timely basis, or if revenues from collaboration arrangements are less than we have projected, we may be required to further revise our business plan and strategy, which may result in us significantly curtailing, delaying or discontinuing one or more of our research or development programs or may result in our being unable to expand our operations or otherwise capitalize on our business opportunities. As a result, our business, financial condition and results of operations could be materially affected.
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As a result of our limited operating history, we may not be able to correctly estimate, operating expenses, need for investment capital, or stability of operations, which could lead to cash shortfalls.
We have a limited operating history from which to evaluate our business. As a result, our historical financial data is of limited value in estimating future operating expenses. We have not obtained regulatory approvals for any of our clinical assets. Therefore, our budgeted operating expense levels are based in part on our expectations concerning the FDA approval process and expenses related to development of other clinical assets. Failing to reach our short-term developmental milestones within anticipated timelines due to serious adverse or unacceptable side effects caused by our clinical assets, or other events, many of which may be beyond our control, may cause our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year.
Preclinical drug development for our clinical assets (AZD1656 and AZD5904) is expensive, time-consuming, and uncertain. Our preclinical trials may fail to adequately demonstrate pharmacologic activity in therapeutic areas of interest; cause unintended short- or long-term effects in other bodily systems; or produce unexpected toxicity that may alter or risk benefit assessment.
The scientific discoveries that form the basis for our efforts to generate and develop our clinical assets are relatively recent. AZD1656 is a glucokinase activator that is in a number of Phase II ready autoimmune disorders including uveitis, Hashimoto’s thyroiditis, preterm labor, and renal transplant, and the successful development of AZD1656 may require additional studies and efforts to optimize its therapeutic potential. In addition, our development pipeline includes what we believe to be a potent irreversible inhibitor of human Myeloperoxidase (MPO) that has the potential to treat idiopathic male infertility, which we refer to as AZD5904. AZD5904 may not demonstrate in patients the therapeutic properties ascribed to it in the laboratory or preclinical studies, and may interact with human biological systems in unforeseen, ineffective, or even harmful ways. If we are not able to successfully develop and commercialize our clinical assets, including AZD1656 and AZD5904, we may never become profitable and the value of our capital stock may decline. Additionally, Manoira may not be successful in evaluating the CDT Assets’ applicability in animal health, explore veterinary market opportunities related to AZD1656, and as such we may never develop and commercialize such assets.
We may not be successful in our efforts to use and expand our development platform to build a pipeline of clinical assets.
A key element of our strategy is to use our experienced management and scientific team to build a pipeline of clinical assets that address a broad range of human diseases in order to treat unmet medical needs. Our current clinical assets and pipeline address the areas of autoimmune disease and idiopathic male infertility. Although our research and development efforts to date have resulted in potential clinical assets, we may not be able to continue to identify and develop additional clinical assets. Even if we are successful in continuing to build our pipeline, the potential clinical assets that we identify may not be suitable for clinical development. For example, these potential clinical assets may be shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance. If we do not successfully develop and commercialize clinical assets based upon our approach, we will not be able to obtain product revenue in future periods, which likely would result in significant harm to our financial position. There is no assurance that we will be successful in our preclinical and clinical development of our current or future clinical assets, and the process of obtaining regulatory approvals will, in any event, require the expenditure of substantial time and financial resources.
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Clinical drug development for our clinical assets is very expensive, time-consuming, difficult to design and implement, and uncertain. Our clinical trials may fail to adequately demonstrate the safety and efficacy of our clinical assets, which could prevent or delay regulatory approval and commercialization.
Clinical drug development for our clinical assets is very expensive, time-consuming, difficult to design and implement, and its outcome is inherently uncertain. Before obtaining regulatory approval for the commercial sale of a clinical asset, we must demonstrate through clinical trials that a clinical asset is both safe and effective for use in the target indication, which is impossible to predict. Most clinical assets that commence clinical trials are never approved by regulatory authorities for commercialization. Our clinical assets are in various stages of development and a failure of one more clinical trial can occur at any stage of testing or at any time during the trial process. We expect that clinical trials for these clinical assets will continue for several years but may take significantly longer than expected to complete. Not all of our clinical assets have been tested in humans and the first use in humans may reveal unexpected effects. We have not completed all clinical trials for the approval of any of our clinical assets.
We may experience delays in ongoing and future clinical trials for our clinical assets and we do not know if future clinical trials, if any, will begin on time, need to be redesigned, enroll adequate number of patients on time or be completed on schedule, if at all. In addition, the Company, any partner with which we currently or may in the future collaborate, the FDA, an IRB or other regulatory authorities, including state and local agencies and counterpart agencies in foreign countries, may suspend, delay, require modifications to, or terminate our clinical trials at any time, for various reasons, including:
| ● | discovery of safety or tolerability concerns, such as serious or unexpected toxicities or side effects or exposure to otherwise unacceptable health risks, experienced by study participants or other safety issues; |
| ● | lack of effectiveness of any clinical asset during clinical trials or the failure of our clinical assets to meet specified endpoints; |
| ● | slower than expected rates of subject recruitment and enrollment rates or inability to enroll a sufficient number of patients in clinical trials resulting from numerous factors, including the prevalence of other companies’ clinical trials for their clinical assets for the same indication, or clinical trials for indications for which patients do not as commonly seek treatment; |
| ● | difficulty in retaining subjects who have initiated a clinical trial but may withdraw at any time due to adverse side effects from the therapy, insufficient efficacy, fatigue with the clinical trial process, or for any other reason; |
| ● | difficulty in obtaining IRB approval for studies to be conducted at each clinical trial site; |
| ● | delays in manufacturing or obtaining, or inability to manufacture or obtain, sufficient quantities of materials for use in clinical trials; |
| ● | inadequacy of or changes in our manufacturing process or the product formulation or method of delivery; |
| ● | changes in applicable laws, regulations, and regulatory policies; |
| ● | delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective CROs, clinical trial sites, and other third-party contractors; |
| ● | inability to add a sufficient number of clinical trial sites; |
| ● | uncertainty regarding proper formulation and dosing; |
| ● | failure by us, our employees, our CROs or their employees, or other third-party contractors to comply with contractual and applicable regulatory requirements or to perform their services in a timely or acceptable manner; |
| ● | failure by us, our employees, our CROs or their employees, or any partner with which we may collaborate or their employees to comply with applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security, and recordkeeping for drug and biologic products; |
| ● | scheduling conflicts with participating clinicians and clinical institutions; |
| ● | failure to design appropriate clinical trial protocols; |
| ● | insufficient data to support regulatory approval; |
| ● | inability or unwillingness of medical investigators to follow our clinical trial protocols; or |
| ● | difficulty in maintaining contact with subjects during or after treatment, which may result in incomplete data. |
We or any partner with which we may collaborate may suffer significant setbacks in their clinical trials similar to the experience of a number of other companies in the pharmaceutical and biotechnology industries, even after receiving promising results in earlier trials. In the event that we or our potential partners abandon or are delayed in the clinical development efforts related to our clinical assets, we may not be able to execute on our business plan effectively and our business, financial condition, operating results, and prospects would be harmed.
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We may be unable to obtain regulatory approval for our early-stage clinical assets under applicable regulatory requirements. The FDA and foreign regulatory bodies have substantial discretion in the approval process, including the ability to delay, limit, or deny approval of clinical assets. The delay, limitation, or denial of any regulatory approval would adversely impact commercialization, our potential to generate revenue, our business, and our operating results.
We currently have no products approved for sale, and we may never obtain regulatory approval to commercialize any of our current or future clinical assets. The research, testing, manufacturing, safety surveillance, efficacy, quality control, recordkeeping, labeling, packaging, storage, approval, sale, marketing, distribution, import, export, and reporting of safety and other post-market information related to our drug products are subject to extensive regulation by the FDA and other regulatory authorities in the U.S. and in foreign countries, and such regulations differ from country to country. We are not permitted to market any of our current clinical assets in the U.S. until we receive approval of an NDA, Biologics License Application (a “BLA”), or other applicable regulatory filing from the FDA. We are also not permitted to market any of our current clinical assets in any foreign countries until we or our partners receive the requisite approval from the applicable regulatory authorities of such countries. To gain approval to market a new drug such as AZD1656 and AZD5904, the FDA and/or foreign regulatory authorities must receive, among other things, preclinical and clinical data that adequately demonstrate the safety, purity, potency, efficacy, and compliant manufacturing of the drug product for the intended indication applied for in a NDA, BLA, or other applicable regulatory filing. The development and approval of new drug products involves a long, expensive, and uncertain process, and delay or failure can occur at any stage. A number of companies in the pharmaceutical and biopharmaceutical industry have suffered significant setbacks in nonclinical development, clinical trials, including in Phase III clinical development, even after promising results in earlier preclinical studies or clinical trials. These setbacks have been caused by, among other things, findings made while clinical trials were underway and safety or efficacy observations made in clinical trials, including previously unreported adverse events. Success in clinical trials does not ensure that later clinical trials will be successful, or that nonclinical studies will be successful. The results of clinical trials by other parties may not be indicative of the results in trials that we or our partners may conduct.
The FDA and foreign regulatory bodies have substantial discretion in the drug development and approval process, including the ability to delay, limit drug development, or limit or deny approval of clinical assets for many reasons. The FDA or the applicable foreign regulatory body may:
| ● | disagree with the design or implementation of one or more clinical trials; |
| ● | not deem a clinical asset safe and effective for its proposed indication, or may deem a clinical asset’s safety or other perceived risks to outweigh its clinical or other benefits; |
| ● | not find the data from preclinical studies and clinical trials sufficient to support approval, or the results of clinical trials may not meet the level of statistical or clinical significance required by the FDA or the applicable foreign regulatory body for approval; |
| ● | disagree with our interpretation of data from preclinical studies or clinical trials performed by us or third parties, or with the interpretation of any partner with which we may collaborate; |
| ● | determine the data collected from preclinical or clinical trials may not be sufficient to support the submission of an Investigational New Drug Application (“IND”) or NDA, or other applicable regulatory filing; |
| ● | require additional preclinical studies or clinical trials; |
| ● | identify deficiencies in the formulation, quality control, labeling, or specifications of our current or future clinical assets; |
| ● | require clinical trials in pediatric patients in order to establish pharmacokinetics or safety for this more drug-sensitive population; |
| ● | grant approval contingent on the performance of costly additional post-approval clinical trials; |
| ● | approve our current or any future clinical assets for a more limited indication or a narrower patient population than we originally requested or with strong warnings that may affect marketability; |
| ● | not approve the labeling that we believe is necessary or desirable for the successful commercialization of our clinical assets; |
| ● | not approve of the manufacturing processes, controls, or facilities of third-party manufacturers or testing labs with which we contract; |
| ● | consider our products a device instead of a drug requiring a different approval process and manufacturing needs; |
| ● | consider one of our products a combination product instead of a singular drug requiring additional clinical trials or increased number of patients per study; or |
| ● | change its approval policies or adopt new regulations in a manner rendering our clinical data or regulatory filings insufficient for approval. |
Any delay, limitation, or denial in any applicable regulatory approval for any of our clinical assets would delay or adversely impact commercialization of our clinical assets and would harm our business, financial condition, operating results, and prospects.
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We have identified material weaknesses in our internal control over financial reporting. If we fail to remedy these weaknesses or maintain an effective system of internal controls, then our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. We may identify additional material weaknesses in our internal controls over financing reporting which we may not be able to remedy in a timely manner.
In connection with the preparation and audit of the financial statements as of and for the fiscal years ended December 31, 2025 and 2024, material weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. These material weaknesses primarily relate to the following matters that are relevant to the preparation of our financial statements:
| ● | The segregation of duties is limited and heavily reliant on interim personnel and third-party consultants to perform these activities, including the lack of timely review and approval of travel and entertainment expenses. |
| ● | The Company lacks a formal process for review and approval of significant transactions and accounts on a contemporaneous basis and there have been numerous, recurring errors in account balances and disclosures. |
| ● | The Company has not designed adequate and appropriate and internal controls under an appropriate internal control over financial reporting framework. |
| ● | The Company did not appropriately review and evaluate the accounting implications of all material transactions that occurred during the period. |
| ● | The review controls around certain related party transactions did not operate consistently and the review of such transactions was not always contemporaneously documented. |
If these material weaknesses are not remediated, it could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. We are reviewing measures designed to improve our internal control over financial reporting to remediate these material weaknesses, although they have not been fully remediated as of the date of this filing. As a part of these measures, we also expect to engage an external advisor to assist with evaluating and documenting the design and operating effectiveness of internal controls and assisting with the remediation of deficiencies when funding and additional liquidity becomes available, as necessary. The primary costs associated with such measures are corresponding recruiting and additional salary and consulting costs, which are difficult to estimate but which may be significant. These additional resources and procedures are intended to enable us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control procedures.
The material weaknesses will not be considered remediated until a remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively. A failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock.
Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating.
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There is a risk that we will fail to maintain an effective system of internal controls and our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. We may identify material weaknesses in our internal controls over financing reporting which we may not be able to remedy in a timely manner.
As a public company, we operate in an increasingly demanding regulatory environment, which requires us to comply with the Sarbanes-Oxley Act, the regulations of Nasdaq, the rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements, and more complex accounting rules. Responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent financial fraud.
We may discover additional weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, investors could lose confidence in our reported financial information, and we could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities.
If we do not develop and implement all required accounting practices and policies, we may be unable to provide the financial information required of a U.S. publicly traded company in a timely and reliable manner.
If we fail to develop and maintain effective internal controls and procedures and disclosure procedures and controls, we may be unable to provide financial information and required SEC reports that a U.S. publicly traded company is required to provide in a timely and reliable fashion. Any such delays or deficiencies could penalize us, including by limiting our ability to obtain financing, either in the public capital markets or from private sources and hurt our reputation and could thereby impede our ability to implement our growth strategy. In addition, any such delays or deficiencies could result in our failure to meet the requirements for continued listing of our shares of common stock on a national securities exchange.
We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance coverage for those claims is inadequate.
We face an inherent risk of product liability as a result of the clinical testing of our clinical assets and will face an even greater risk if we commercialize any products. This risk exists even if a product is approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA or an applicable foreign regulatory authority. Our products and clinical assets are designed to affect important bodily functions and processes. Any side effects, manufacturing defects, misuse, or abuse associated with our clinical assets could result in injury to a patient or even death. We cannot offer any assurance that we will not face product liability suits in the future, nor can we assure investors that our insurance coverage will be sufficient to cover our liability under any such cases. In addition, a liability claim may be brought against us even if our clinical assets merely appear to have caused an injury. Product liability claims may be brought against us by consumers, health care providers, pharmaceutical companies, or others selling or otherwise coming into contact with our clinical assets, among others. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm.
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We currently rely on, and expect to continue to rely on, third-party CROs and other third parties to conduct and oversee our clinical trials and other aspects of product development. If these third parties do not meet our requirements or otherwise conduct the trials as required, we may not be able to satisfy our contractual obligations or obtain regulatory approval for, or commercialize, our clinical assets when expected or at all.
We have in the past relied and expect to continue to rely on third-party CROs to conduct and oversee our clinical trials and other aspects of product development. We also rely upon various medical institutions, clinical investigators, and contract laboratories to conduct our trials in accordance with our clinical trial protocols and all applicable regulatory requirements, including the FDA’s regulations and GCPs, which are an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors, and state regulations governing the handling, storage, security, and recordkeeping for drug and biologic products. These CROs and other third parties play a significant role in the conduct of these trials and the subsequent collection and analysis of data from the clinical trials. We rely heavily on these parties for the execution of our clinical trials and preclinical studies, and control only certain aspects of their activities. We, our CROs, and other third-party contractors are required to comply with GCP, GLP, and GACP requirements, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for products in clinical development. Regulatory authorities enforce these GCP, GLP, and GACP requirements through periodic inspections of trial sponsors, principal investigators, and trial sites. If we or any of these third parties fail to comply with applicable GCP, GLP, or GACP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or other regulatory authority may require us to perform additional clinical trials before approving our or our partners’ marketing applications. We cannot assure investors that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical or preclinical trials complies with applicable GCP and GLP requirements. In addition, our clinical trials must generally be conducted with product produced under cGMP regulations. Our failure to comply with these regulations and policies may require us to repeat clinical trials, which would delay the regulatory approval process.
Our CROs are not our employees, and we do not control whether or not they devote sufficient time and resources to our clinical trials. Our CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities, which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow potential competitors to access and exploit our proprietary technology. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical trial protocols or regulatory requirements or for any other reason, our clinical trials may be extended, delayed, or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize any clinical asset that we develop. As a result, our financial results and the commercial prospects for any clinical asset that we develop would be harmed, our costs could increase, and our ability to generate revenue could be delayed.
If any of our CROs or clinical trial sites terminate their involvement in one of our clinical trials for any reason, we may not be able to enter into arrangements with alternative CROs or clinical trial sites or do so on commercially reasonable terms. In addition, if our relationship with clinical trial sites is terminated, we may experience the loss of follow-up information on patients enrolled in our ongoing clinical trials unless we are able to transfer the care of those patients to another qualified clinical trial site. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and could receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be questioned by the FDA.
We rely completely on third-party contractors to supply, manufacture, and distribute clinical drug supplies for our clinical assets, including certain sole-source suppliers and manufacturers. We intend to rely on third parties for commercial supply, manufacturing, and distribution if any of our clinical assets receive regulatory approval and we expect to rely on third parties for supply, manufacturing, and distribution of preclinical, clinical, and commercial supplies of any future clinical assets.
With the exception of our work at our Cambridge facilities, we do not currently have, nor do we plan to acquire, the infrastructure or capability to supply, manufacture, or distribute preclinical, clinical, or commercial quantities of drug substances or products. Our ability to develop our clinical assets depends and our ability to commercially supply our products will depend, in part, on our ability to successfully obtain the raw materials and APIs and other substances and materials used in our clinical assets from third parties and to have finished products manufactured by third parties in accordance with regulatory requirements and in sufficient quantities for preclinical and clinical testing and commercialization. If we fail to develop and maintain supply relationships with these third parties, we may be unable to continue to develop or commercialize our clinical assets.
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We rely and will continue to rely on certain third parties as the sole source of the materials they supply or the finished products they manufacture. Any of our existing suppliers or manufacturers may:
| ● | fail to supply us with product on a timely basis or in the requested amount due to unexpected damage to or destruction of facilities or equipment or otherwise; |
| ● | fail to increase manufacturing capacity and produce drug product and components in larger quantities and at higher yields in a timely or cost-effective manner, or at all, to sufficiently meet our commercial needs; |
| ● | be unable to meet our production demands due to issues related to their reliance on sole-source suppliers and manufacturers; |
| ● | supply us with product that fails to meet regulatory requirements; |
| ● | become unavailable through business interruption or financial insolvency; |
| ● | lose regulatory status as an approved source; |
| ● | be unable or unwilling to renew current supply agreements when such agreements expire on a timely basis, on acceptable terms or at all; or |
| ● | discontinue production or manufacturing of necessary drug substances or products. |
In the event of any of the foregoing, if we do not have an alternative supplier or manufacturer in place, we would be required to expend substantial management time and expense to identify, qualify, and transfer processes to alternative suppliers or manufacturers. Transferring technology to other sites may require additional processes, technologies, and validation studies, which are costly, may take considerable amounts of time, may not be successful and, in most cases, require review and approval by the FDA. Any need to find and qualify new suppliers or manufacturers could significantly delay production of our clinical assets, adversely impact our ability to market our clinical assets, and adversely affect our business. Replacements may not be available to us on a timely basis, on acceptable terms, or at all. Additionally, we and our manufacturers do not currently maintain significant inventory of drug substances and other materials. Any interruption in the supply of a drug substance or other material or in the manufacture of our clinical assets could have a material adverse effect on our business, financial condition, operating results, and prospects.
We do not have direct control over the ability of our contract suppliers and manufacturers to maintain adequate capacity and capabilities to serve our needs, including quality control, quality assurance, and qualified personnel. Although we are ultimately responsible for ensuring compliance with regulatory requirements such as cGMPs and GACP, we are dependent on our contract suppliers and manufacturers for day-to-day compliance with cGMPs or GACP for production of raw materials, APIs, and finished products. Facilities used by our contract suppliers and manufacturers to produce the APIs and other substances and materials or finished products for commercial sale must pass inspection and be approved by the FDA and other relevant regulatory authorities. Our contract suppliers and manufacturers must comply with cGMP and GACP requirements enforced by the FDA through its facilities inspection program and review of submitted technical information. If the safety of any product or clinical asset or component is compromised due to a failure to adhere to applicable laws or for other reasons, we may not be able to successfully commercialize or obtain regulatory approval for the affected product or clinical asset, and we may be held liable for injuries sustained as a result. Any of these factors could cause a delay or termination of preclinical studies, clinical trials, or regulatory submissions or approvals of our clinical assets, and could entail higher costs or result in us being unable to effectively commercialize our approved products on a timely basis, or at all.
In addition, these contract manufacturers are engaged with other companies to supply and manufacture materials or products for such companies, which also exposes our suppliers and manufacturers to regulatory risks for the production of such materials and products. As a result, failure to meet the regulatory requirements for the production of those materials and products may also affect the regulatory clearance of a contract supplier’s or manufacturer’s facility. If the FDA or a comparable foreign regulatory agency does not approve these facilities for the supply or manufacture of our clinical assets, or if it withdraws its approval in the future, we may need to find alternative supply or manufacturing facilities, which would negatively impact our ability to develop, obtain regulatory approval of, or market our clinical assets, if approved.
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If any of our third-party contractors terminate their involvement in the supply, manufacture, or distribution of clinical drug supplies for us for any reason, we may not be able to enter into arrangements with alternative third party-contractors, or do so on commercially reasonable terms. In addition, if our relationship with such third-party contractors is terminated, we may experience a negative impact to the respective licenses on which we rely and, therefore, on our ability to obtain regulatory approval for, or commercialize, our clinical assets when expected or at all.
Our reliance on contract manufacturers and suppliers further exposes us to the possibility that they, or third parties with access to their facilities, will have access to and may misappropriate our trade secrets or other proprietary information.
In addition, the manufacturing facilities of certain of our suppliers are located outside of the U.S. This may give rise to difficulties in importing our products or clinical assets or their components into the U.S. or other countries as a result of, among other things, regulatory agency approval requirements or import inspections, incomplete or inaccurate import documentation, or defective packaging.
We may choose not to continue developing or commercializing any of our clinical assets at any time during development or after approval, which would reduce or eliminate our potential return on investment for those clinical assets.
We may decide to discontinue the development of any of our clinical assets or not to continue commercializing one or more of our approved clinical assets for a variety of reasons, including the appearance of new technologies that make a product obsolete, competition from a competing product, or changes in or failure to comply with applicable regulatory requirements at any time. If we terminate a program in which we have invested significant resources, we will not receive any return on our investment and we will have missed the opportunity to have allocated those resources to potentially more productive uses.
If we fail to attract and retain management and other key personnel, we may be unable to continue to successfully develop or commercialize our clinical assets or otherwise implement our business plan.
Our ability to compete in the highly competitive pharmaceuticals industry depends upon our ability to attract and retain highly qualified managerial, scientific, medical, sales, marketing, and other personnel. We are highly dependent on our management, including our Chief Executive Officer, Andrew Regan. The loss of the services of any of these individuals could impede, delay, or prevent the successful development of our product pipeline, completion of our planned clinical trials, commercialization of our clinical assets, or in-licensing or acquisition of new assets and could negatively impact our ability to successfully implement our business plan. If we lose the services of any of these individuals, we might not be able to find suitable replacements on a timely basis or at all, and our business could be harmed as a result. We do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees. In order to retain valuable employees, in addition to salary and cash incentives, we provide stock options that vest over time.
We might not be able to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical, and other businesses. We could have difficulty attracting experienced personnel to the Company and may be required to expend significant financial resources in our employee recruitment and retention efforts. Many of the other pharmaceutical companies with whom we compete for qualified personnel have greater financial and other resources, different risk profiles, and longer histories in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will harm our ability to implement our business strategy and achieve our business objectives.
In addition, we have scientific and clinical advisors who assist us in formulating our development and clinical strategies. These advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. In addition, our advisors may have arrangements with other companies to assist those companies in developing products or technologies that may compete with those of the Company.
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We currently have limited marketing capabilities and no sales organization. If we do not establish sales and marketing capabilities on our own or through third parties, we will be limited in our commercialization to license deals with third parties following successful Phase II trials.
We currently have limited marketing capabilities and no sales organization. If we do not establish sales and marketing capabilities on our own or through third parties, we will be limited in our commercialization to license deals with third parties following successful Phase II trials. To commercialize our clinical assets, if approved, in the U.S., Canada, the European Union, and other jurisdictions that we seek to enter, we must build our marketing, sales, distribution, managerial, and other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful in doing so. Although our management team has experience in the marketing, sale, and distribution of pharmaceutical products from prior employment at other companies, we as a company have no prior experience in the marketing, sale, and distribution of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain, and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing, and distribution capabilities would adversely impact the commercialization of these products. We may choose to collaborate with additional third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of its own sales force and distribution systems. If we are unable to enter into such arrangements on acceptable terms or at all, we may not be able to successfully commercialize our clinical assets. If we are unable to successfully commercialize our clinical assets, either on our own or through collaborations with one or more third parties, our business, financial condition, operating results, and prospects would suffer.
Our failure to successfully in-license, acquire, develop, and market additional clinical assets or approved products would impair our ability to grow our business.
We intend to in-license, acquire, develop, and market additional products and clinical assets and we may in-license or acquire commercial-stage products or engage in other strategic transactions. Because our internal research and development capabilities are limited, we may be dependent upon pharmaceutical companies, academic scientists, and other researchers to sell or license products or technology to us. The success of this strategy depends partly upon our ability to identify and select promising pharmaceutical clinical assets and products, negotiate licensing or acquisition agreements with their current owners, and finance these arrangements.
The process of proposing, negotiating, and implementing a license or acquisition of a clinical asset or approved product is lengthy and complex. Other companies, including some with substantially greater financial, marketing, sales, and other resources, may compete with us for the license or acquisition of clinical assets and approved products. We have limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses, and technologies and integrate them into our current infrastructure. Moreover, we may devote resources to potential acquisitions or licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts. We may not be able to acquire the rights to additional clinical assets on terms that we find acceptable, or at all.
Further, any clinical asset that we acquire may require additional development efforts prior to commercial sale, including preclinical or clinical testing and approval by the FDA and applicable foreign regulatory authorities. All clinical assets are prone to risks of failure typical of pharmaceutical product development, including the possibility that a clinical asset will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, we cannot provide assurance that any approved products that we acquire will be manufactured or sold profitably or achieve market acceptance.
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Additional potential transactions that we may consider include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations, and investments. Any such transaction may require us to incur non-recurring or other charges, may increase our near- and long-term expenditures, and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results. For example, these transactions entail numerous potential operational and financial risks, including:
| ● | exposure to unknown liabilities; |
| ● | disruption of our business and diversion of our management’s time and attention in order to develop acquired products, clinical assets, or technologies; |
| ● | incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; |
| ● | substantial acquisition and integration costs; |
| ● | write-downs of assets or impairment charges; |
| ● | increased amortization expenses; |
| ● | difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel; |
| ● | impairment of relationships with key suppliers, partners, or customers of any acquired businesses due to changes in management and ownership; and |
| ● | inability to retain our key employees or those of any acquired businesses. |
Accordingly, there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, and any transaction that we do complete could harm our business, financial condition, operating results, and prospects.
Manufacturing and supply of the APIs and other substances and materials used in our clinical assets is a complex and technically challenging undertaking, and there is potential for failure at many points in the manufacturing, testing, quality assurance, and distribution supply chain, as well as the potential for latent defects after products have been manufactured and distributed.
Manufacturing and supply of APIs, other substances, and materials and finished drug products is technically challenging. Changes beyond our direct control can impact the quality, volume, price, and successful delivery of our clinical assets and can impede, delay, limit, or prevent the successful development and commercialization of our clinical assets. Mistakes and mishandling are not uncommon and can affect successful production and supply. Some of these risks include:
| ● | failure of our manufacturers to follow cGMP or GACP requirements or mishandling of product while in production or in preparation for transit; |
| ● | inability of our contract suppliers and manufacturers to efficiently and cost-effectively increase and maintain high yields and batch quality, consistency, and stability; |
| ● | our inability to develop an FDA-approved bioassay for release of any future product; |
| ● | difficulty in establishing optimal drug delivery substances and techniques, production, and storage methods and packaging and shipment processes; |
| ● | transportation and import/export risk, particularly given the global nature of our supply chain; |
| ● | delays in analytical results or failure of analytical techniques that we depend on for quality control and release of any future product; |
| ● | natural disasters, pandemics, labor disputes, financial distress, lack of raw material supply, issues with facilities and equipment, or other forms of disruption to business operations of our contract manufacturers and suppliers; and |
| ● | latent defects that may become apparent after the product has been released and which may result in recall and destruction of product. |
Any of these factors could result in delays or higher costs in connection with our clinical trials, regulatory submissions, required approvals, or commercialization of our clinical assets, which could harm our business, financial condition, operating results, and prospects.
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Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.
The operations of the Company since the Business Combination and of Old Conduit prior to the Business Combination have been primarily limited to researching and developing our clinical assets and undertaking preclinical studies and clinical trials of our clinical assets. We have not yet obtained regulatory approvals for any of our clinical assets. Consequently, any predictions investors make about our future success or viability may not be as accurate as they could be if we had a longer operating history or approved products on the market. Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following:
| ● | delays in the commencement, enrollment, and the timing of clinical testing for our clinical assets; |
| ● | the timing and success or failure of clinical trials for our clinical assets or competing clinical assets, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners; |
| ● | any delays in regulatory review and approval of clinical assets in clinical development; |
| ● | the timing and cost of, and level of investment in, research and development activities relating to our clinical assets, which may change from time to time; |
| ● | the cost of manufacturing our clinical assets, which may vary depending on FDA guidelines and requirements, and the quantity of production; |
| ● | our ability to obtain additional funding to develop our clinical assets; |
| ● | expenditures that we will or may incur to acquire or develop additional clinical assets and technologies; |
| ● | the level of demand for our clinical assets, should they receive approval, which may vary significantly; |
| ● | potential side effects of our clinical assets that could delay or prevent commercialization or cause an approved drug to be taken off the market; |
| ● | the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our clinical assets, if approved; |
| ● | our dependency on third-party manufacturers to supply or manufacture our clinical assets; |
| ● | our ability to establish an effective sales, marketing, and distribution infrastructure in a timely manner; |
| ● | market acceptance of our clinical assets, if approved, and our ability to forecast demand for those clinical assets; |
| ● | our ability to receive approval and commercialize our clinical assets outside of the U.S.; |
| ● | our ability to establish and maintain collaborations, licensing, or other arrangements; |
| ● | our ability and third parties’ abilities to protect intellectual property rights; |
| ● | costs related to and outcomes of potential litigation or other disputes; |
| ● | our ability to adequately support future growth; |
| ● | our ability to attract and retain key personnel to manage our business effectively; |
| ● | potential liabilities associated with hazardous materials; |
| ● | our ability to maintain adequate insurance policies; and |
| ● | future accounting pronouncements or changes in our accounting policies. |
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Fluctuations in foreign currency could have an effect on our reported results of operations.
Our exposure to fluctuations in foreign currency rates results primarily from the translation exposure associated with the preparation of our consolidated financial statements, as well as from transaction exposure associated with transactions in currencies other than our functional currency. While our consolidated financial statements are reported in U.S. dollars, our financial statements of foreign subsidiaries are prepared using the British pound sterling as the functional currency and then translated into U.S. dollars. We cannot accurately predict the nature or extent of future exchange rate variability of the British pound sterling or the exchange rate relative to the U.S. dollar. Foreign exchange rates are sensitive to factors beyond our control. In addition, Brexit has caused, and may continue to cause, significant volatility in currency exchange rates, especially between the U.S. dollar and the British pound sterling. These fluctuations in foreign currency exchange rates could negatively affect our results of operations and impact reported financial results.
Our operating results and liquidity needs could be negatively affected by market fluctuations and economic downturn.
Our operating results and liquidity could be negatively affected by economic conditions generally, both in the U.S. and elsewhere around the world. The market for discretionary medical products and procedures may be particularly vulnerable to unfavorable economic conditions. Some patients may consider certain of our clinical assets to be discretionary, and if full reimbursement for such products is not available, demand for these products may be tied to the discretionary spending levels of our targeted patient populations. Domestic and international equity and debt markets have experienced and may continue to experience heightened volatility and turmoil based on domestic and international economic conditions and concerns. In the event these economic conditions and concerns continue or worsen and the markets continue to remain volatile, our operating results and liquidity could be adversely affected by those factors in many ways, including weakening demand for certain of our products and making it more difficult for us to raise funds if necessary. Additionally, although we plan to market our products primarily in the U.S., we could in the future have partners with extensive global operations, indirectly exposing us to risk.
We maintain our cash and cash equivalents with high quality, accredited financial institutions. However, some of these accounts exceed the government-insured limits, and, while we believe that we are not exposed to significant credit risk due to the financial strength of these depository institutions or investments, the failure or collapse of one or more of these depository institutions or default on these investments could materially adversely affect our ability to recover these assets and/or materially harm our financial condition.
We are increasingly dependent on information technology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks.
Significant disruptions to our information technology systems or breaches of information security could adversely affect our business. In the ordinary course of business, we collect, store, and transmit large amounts of confidential information, and it is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. The size and complexity of our information technology systems, and those of our third-party vendors with whom we contract, make such systems potentially vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our employees, partners, or vendors, from attacks by malicious third parties, or from intentional or accidental physical damage to our systems infrastructure maintained by us or by third parties. Maintaining the secrecy of this confidential, proprietary, or trade secret information is important to our competitive business position. While we have taken steps to protect such information and invested in information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches in our systems or the unauthorized or inadvertent wrongful use or disclosure of confidential information that could adversely affect our business operations or result in the loss, dissemination, or misuse of critical or sensitive information. A breach of our security measures or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information, or other confidential information, whether as a result of theft, hacking, fraud, trickery, or other forms of deception, or for any other reason, could enable others to produce competing products, use our proprietary technology or information, or adversely affect our business or financial condition. Further, any such interruption, security breach, loss, or disclosure of confidential information could result in financial, legal, business, and reputational harm to us and could have a material adverse effect on our business, financial position, results of operations, or cash flow.
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Our business and operations would suffer in the event of failures in our internal computer systems.
Despite the implementation of security measures, our computer systems and those of our current and any future partners, contractors, and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. While we have not experienced any such material system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our manufacturing activities, development programs, and business operations. For example, the loss of manufacturing records or clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. If we experienced a security breach, our online sources were hacked, or we experienced a data leak, it could result in confidential clinical trial data being leaked to competitors and the market. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further commercialization and development of our products and clinical assets could be delayed.
Risks Related to Intellectual Property
Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and operating results.
Our business depends on our intellectual property and proprietary technology, the protection of which is crucial to the success of our business. We rely on a combination of trademark, copyright, and trade secret laws, license agreements, intellectual property assignment agreements, and confidentiality procedures to protect our intellectual property. Additionally, we rely on proprietary information (such as trade secrets, know-how, and confidential information) to protect intellectual property that may not be patentable, or that we believe is best protected by means that do not require public disclosure. We generally attempt to protect our intellectual property, technology, and confidential information by requiring our employees and consultants who develop intellectual property on our behalf to enter into confidentiality and invention assignment agreements and third parties that we share information with to enter into nondisclosure agreements. These agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property, or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information or technology, or infringement of our intellectual property. For example, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be willfully breached or may otherwise fail to prevent disclosure, third-party infringement, or misappropriation of our proprietary information, may be limited as to their term, and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. In addition, our proprietary information may otherwise become known or be independently developed by our competitors or other third parties. To the extent that our employees, consultants, contractors, and other third parties use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our intellectual property rights and other proprietary rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business position.
Despite our efforts to protect our proprietary rights, other parties may unintentionally or willfully disclose, obtain, or use our technologies or systems, which may allow unauthorized parties to copy aspects of our platform or other software, technology, and functionality or obtain and use information that we consider proprietary. In addition, unauthorized parties may also attempt, or successfully endeavor, to obtain our intellectual property, confidential information, and trade secrets through various methods, including through scraping of public data or other content from our website or mobile applications, cybersecurity attacks, and legal or other methods of protecting this data may be inadequate. Monitoring unauthorized use and disclosures of our intellectual property, proprietary technology, or confidential information can be difficult and expensive and we cannot be sure that the steps we have taken will prevent misappropriation or infringement of our intellectual property or proprietary rights.
We have registered the domain name for the website that we use in our business, which is www.cdtequity.com. The inclusion of the website address in this Annual Report does not include or incorporate by reference the information on the Company’s website into this document.
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Competitors have and may continue to adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks that are similar to our trademarks. Further, litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies in the U.S. and abroad may be necessary in the future to enforce our intellectual property rights and to determine the validity and scope of the proprietary rights of others. Any litigation initiated by us concerning the violation by third parties of our intellectual property rights is likely to be expensive and time-consuming and could lead to the invalidation of, or render unenforceable, our intellectual property, or could otherwise have negative consequences for us. Even when we sue other parties for such infringement, that suit may have adverse consequences for our business. In addition, we may not timely or successfully apply for a patent or register our trademarks or otherwise secure our intellectual property, which could result in negative effects to our market share, financial condition, and results of operations. Our efforts to protect, maintain, or enforce our proprietary rights may not be respected in the future or may be invalidated, circumvented, or challenged, and could result in substantial costs and diversion of resources, which could adversely affect our business, financial condition, and operating results.
We may be unable to continue to use the domain name that we use in our business or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand, trademarks, or service marks.
We have registered the domain name that we use in our business. If we lose the ability to use that domain name, whether due to trademark claims, failure to renew the applicable registration, or any other cause, we may be forced to market our business under a new domain name, which could cause us substantial harm, or to incur significant expense in order to purchase rights to the domain name in question. We may not be able to obtain preferred domain names outside the U.S. due to a variety of reasons, including because they are already held by others. In addition, our competitors and others could attempt to capitalize on our brand recognition by using domain names similar to our domain name. We may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks. Protecting, maintaining, and enforcing our rights in our domain names may require litigation, which could result in substantial costs and diversion of resources, which could in turn adversely affect our business, financial condition, and operating results.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting, and defending patents on our clinical assets in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly developing countries. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the U.S. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement on infringing activities is inadequate. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. In addition, certain countries in Europe and certain developing countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to our patents to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license. Our ability to protect and enforce our intellectual property rights may also be adversely affected by unforeseen changes in foreign intellectual property laws.
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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance and annuity fees on any issued patent are due to be paid to the United States Patent and Trademark Office (“USPTO”) and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our clinical assets, our competitors might be able to enter the market, which would have an adverse effect on our business.
If we fail to comply with our obligations under our intellectual property license agreements, we could lose license rights that are important to our business.
We are a party to certain license agreements that impose various diligence, milestone, royalty, insurance, and other obligations on us. If we fail to comply with these obligations, the respective licensors may have the right to terminate the license, in which event we may not be able to develop or market the affected clinical asset. Our business strategy depends on our ability to commercialize our clinical assets and our ability to enter into license agreements relating to such clinical assets is critical to the success of our operations. The loss of such rights could materially adversely affect our business, financial condition, operating results, and prospects. For more information about these license arrangements, see “Business — Principal Strategic Partnerships.”
If we are sued for infringing intellectual property rights of third parties, it will be costly and time-consuming, and an unfavorable outcome in that litigation could have a material adverse effect on our business.
Our commercial success depends upon its ability to develop, manufacture, market, and sell our clinical assets and use our proprietary technologies without infringing the proprietary rights of third parties. We cannot guarantee that marketing and selling such candidates and using such technologies will not infringe existing or future patents. Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the fields relating to our clinical assets. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that others may assert that our clinical assets, technologies, or methods of delivery or use infringe their patent rights. Moreover, it is not always clear to industry participants, including us, which patents cover various drugs, biologics, drug delivery systems, or their methods of use, and which of these patents may be valid and enforceable. Thus, because of the large number of patents issued and patent applications filed in our fields, there may be a risk that third parties may allege they have patent rights encompassing our clinical assets, technologies, or methods.
In addition, there may be issued patents of third parties that are infringed or are alleged to be infringed by our clinical assets or proprietary technologies. We cannot be certain that others have not filed patent applications for technology covered by our own and in-licensed issued patents or our pending applications because some patent applications in the U.S. may be maintained in secrecy until the patents are issued, patent applications in the U.S. and many foreign jurisdictions are typically not published until eighteen months after filing, and publications in the scientific literature often lag behind actual discoveries. Our competitors may have filed, and may in the future file, patent applications covering our clinical assets or technology similar to ours. Any such patent application may have priority over our own and in-licensed patent applications or patents, which could further require us to obtain rights to issued patents covering such technologies. If another party has filed a U.S. patent application on inventions similar to those owned or in-licensed to us, we or, in the case of in-licensed technology, the licensor may have to participate, in the U.S., in an interference proceeding to determine priority of invention.
We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our clinical assets or proprietary technologies infringe such third parties’ intellectual property rights, including litigation. These lawsuits could claim that there are existing patent rights for such drug and this type of litigation can be costly and could adversely affect our operating results and divert the attention of managerial and technical personnel, even if we do not infringe such patents or the patents asserted against us are ultimately established as invalid. There is a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities covered by the patents. In addition, there is a risk that a court will order us to pay the other party damages for having violated the other party’s patents.
As a result of patent infringement claims, or to avoid potential claims, we may choose or be required to seek licenses from third parties. These licenses may not be available on commercially acceptable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property, or such rights might be restrictive and limit our present and future activities. Ultimately, we or a licensee could be prevented from commercializing a product or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.
In addition to possible infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference, derivation, re-examination, or other post-grant proceedings declared or granted by the USPTO, and similar proceedings in foreign countries, regarding intellectual property rights with respect to our current or future products.
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There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries generally. To date, no litigation asserting infringement claims has ever been brought against us. If a third-party claims that we infringe its intellectual property rights, we may face a number of issues, including:
| ● | infringement and other intellectual property claims which, regardless of merit, may be expensive and time-consuming to litigate and may divert our management’s attention from our core business; |
| ● | substantial damages for infringement, which we may have to pay if a court decides that the product or technology at issue infringes or violates the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay treble damages and the patent owner’s attorneys’ fees; |
| ● | a court prohibiting us from selling or licensing the product or using the technology unless the third party licenses its intellectual property rights to us, which it is not required to do; |
| ● | if a license is available from a third party, we may have to pay substantial royalties or upfront fees or grant cross-licenses to intellectual property rights for our products or technologies; and |
| ● | redesigning our products or processes so they do not infringe, which may not be possible or may require substantial monetary expenditures and time. |
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could harm our ability to raise additional funds or otherwise adversely affect our business, financial condition, operating results, and prospects.
Because we rely on certain third-party licensors and partners, and will continue to do so in the future, if one of our licensors or partners is sued for infringing a third party’s intellectual property rights, our business, financial condition, operating results, and prospects could suffer in the same manner as if we were sued directly. In addition to facing litigation risks, we have agreed to indemnify certain third-party licensors and partners against claims of infringement caused by our proprietary technologies, and we have entered or may enter into cost-sharing agreements with some our licensors and partners that could require us to pay some of the costs of patent litigation brought against those third parties whether or not the alleged infringement is caused by our proprietary technologies. In certain instances, these cost-sharing agreements could also require us to assume greater responsibility for infringement damages than would be assumed just on the basis of our technology.
The occurrence of any of the foregoing could adversely affect our business, financial condition, or operating results.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents of our licensors, or other claims may be made against us, which could be expensive and time-consuming.
Competitors may infringe our intellectual property, including our patents or the patents of our licensors. As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive and time-consuming, particularly for a company of our size. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patent claims do not cover its technology or that the factors necessary to grant an injunction against an infringer are not satisfied. An adverse determination of any litigation or other proceedings could put one or more of our patents at risk of being invalidated, interpreted narrowly, or amended such that they do not cover our clinical assets. Moreover, such adverse determinations could put our patent applications at risk of not issuing or issuing with limited and potentially inadequate scope to cover our clinical assets or to prevent others from marketing similar products.
Interference, derivation, or other proceedings brought at the USPTO may be necessary to determine the priority or patentability of inventions with respect to our patent applications or those of our licensors or potential partners. Litigation or USPTO proceedings brought by us may fail or may be invoked against us by third parties. Even if we are successful, domestic or foreign litigation or USPTO or foreign patent office proceedings may result in substantial costs and distraction to our management. We may not be able, alone or with our licensors or potential partners, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the U.S.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings. In addition, during the course of this kind of litigation or proceedings, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments or public access to related documents.
In November and December 2024, the Company received a letter from St George Street Capital and formal complaints filed with the Intellectual Property Office claiming the Company was assigned the US Application, and was not the sole owner, of the AZD 1656 co-crystal patent. In January 2025, Conduit issued a counter statement to the Intellectual Property Office disputing the claim filed by St George Street Capital. As of December 31, 2025, the damages sought by St George Street Capital are unknown and the potential contingency is not considered probable. As such, the Company has not accrued a loss contingency in the accompanying financial statements. We intend to vigorously defend against these claims. Regardless of its outcome, the litigation may impact our business due to, among other things, legal costs and the diversion of the attention of our management.
In addition, in August 2023, prior to the Business Combination, our now wholly-owned subsidiary, Conduit Pharmaceuticals Limited, received a letter from Strand Hanson Limited (“Strand”) claiming it was owed advisory fees pursuant to a previously executed letter. Conduit Pharmaceuticals Limited rejected and disputed the substance of the letter in full. Following such rejection, on September 7, 2023, Strand filed a claim in the Business and Property Courts of England and Wales claiming it is entitled to be paid the sum of $2 million and, as a result of the event the Business Combination is completed, to be issued 21 shares of common stock. On December 16, 2025, the High Court of Justice, Business and Property Courts of England and Wales, ultimately ruled in favor of Strand, with a judgment amount payable from CPL to Strand totaling $9.6 million.
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Our reliance on third parties requires us to share our trade secrets, which increases the possibility that our trade secrets will be misappropriated or disclosed, and confidentiality agreements with employees and third parties may not adequately prevent disclosure of trade secrets and protect other proprietary information.
We consider proprietary trade secrets or confidential know-how and unpatented know-how to be important to our business. We may rely on trade secrets or confidential know-how to protect our technology, especially where we believe that patent protection is of limited value.
To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, collaborators, contractors, and advisors to enter into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements, or other similar agreements with us prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets. However, current or former employees, consultants, collaborators, contractors, and advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. The need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have an adverse effect on our business and results of operations. Enforcing a claim that a third party obtained illegally and is using trade secrets or confidential know-how is expensive, time consuming, and unpredictable. The enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction.
In addition, these agreements typically restrict the ability of our employees, consultants, collaborators, contractors, and advisors to publish data potentially relating to our trade secrets, although our agreements may contain certain limited publication rights. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development, or publication of information by any of our third-party collaborators. A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.
We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed to us alleged trade secrets of their former employers or their former or current customers.
As is common in the biotechnology and pharmaceutical industries, certain of our employees were formerly employed by other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Moreover, we engage the services of consultants to assist it in the development of our products and clinical assets, many of whom were previously employed at or may have previously been or are currently providing consulting services to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may be subject to claims that these employees and consultants or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers or their former or current customers. Although we have no knowledge of any such claims being alleged to date, if such claims were to arise, litigation may be necessary to defend against any such claims. Even if we are successful in defending against any such claims, any such litigation could be protracted, expensive, a distraction to our management team, not viewed favorably by investors and other third parties, and may potentially result in an unfavorable outcome.
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If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our unregistered trademarks or trade names may be challenged, infringed, circumvented, or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to those of ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names. Over the long term, if we are unable to successfully register its trademarks and trade names and establish name recognition based on its trademarks and trade names, then we may not be able to compete effectively, and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights, or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations.
Our proprietary information may be lost, or we may suffer security breaches.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, clinical trial data, proprietary business information, personal data, and personally identifiable information of our clinical trial subjects and employees, in our data centers and on our networks. The secure processing, maintenance, and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, or other disruptions. Although, to our knowledge, we have not experienced any such material security breach to date, any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure, or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, significant regulatory penalties, disrupt our operations, damage our reputation, and cause a loss of confidence in us and our ability to conduct clinical trials, which could adversely affect our reputation and delay our clinical development of our clinical assets.
We use artificial intelligence technology in our business, specifically, in relation to our Service Agreement with Sarborg and challenges with properly managing such technology could result in reputational harm, competitive harm and legal liability, and adversely affect our business, financial condition and results of operations.
On December 12, 2024, we entered into the Sarborg Agreement with Sarborg. Under the terms of the Sarborg Agreement, Sarborg agreed to provide algorithmic and cybernetic technology services to CDT, including the development of decision-support tools and advanced cybernetic systems tailored to enhance CDT’s decision-making processes and maximize the value of its pharmaceutical asset portfolio.
Sarborg agreed to perform the services to CDT comprised of three phases: the Initial Phase (0-24 weeks) focuses on establishing a foundation for collaboration and aligning Sarborg’s services with CDT’s strategic goals; the Development Phase (24-36 weeks) involves building technological infrastructure, including dashboards and predictive models; and the Ongoing Services Phase (36-52 weeks) ensures the sustained functionality and relevance of Sarborg’s deliverables while supporting CDT’s growth through iterative improvements and updates. Sarborg will create specific deliverables, including reports, computer programs, software applications, APIs, mobile applications, source code, written technical specifications and designs, operating and maintenance manuals, and other recorded data and information arising from or relating to the services. Sarborg will provide all necessary resources to perform the services and deliver the deliverables in accordance with the Sarborg Agreement. To date, Sarborg has successfully completed all phases and has achieved all milestones provided for pursuant to the Sarborg Agreement.
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As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed or biased. Datasets used to train or develop AI systems may be insufficient, of inferior quality, or contain biased information. Additionally, the laws and regulations concerning the use of AI continue to evolve. If the use or integration of AI systems, or the outputs generated by such systems, were determined to be non-compliant (e.g., in relation to intellectual property or data privacy rights), this may result in liability, including legal liability, or adversely affect our business, reputation, brand, financial condition and results of operations. It is possible that emerging regulations may limit or block the use of AI in our business and solutions or otherwise impose other restrictions that may affect or impair the usability or efficiency of our business or services for an extended period of time or indefinitely. Our competitors or other third parties may incorporate AI into their product development, technology and infrastructure more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our business, financial condition and results of operations. For more information on our dealings with Sarborg, see “Business- Principal Strategic Partnerships Services Agreement – CDT and Sarborg Limited”.
Risks Related to Securities Markets and Investment in Our Stock
If we do not maintain our trading market’s listing requirements, Nasdaq may delist our securities from trading on its exchange.
The inability to comply with Nasdaq’s continued requirements or standards could result in the delisting of our common stock, which could have a material adverse effect on our financial condition and could cause the value of the common stock to decline.
We do not anticipate paying any dividends in the foreseeable future.
The current expectation is that we will retain our future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of the shares of our common stock will be stockholders’ sole source of gain, if any, for the foreseeable future.
Our Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a chosen judicial forum for disputes with us or our directors, officers, employees, or stockholders.
Our Certificate of Incorporation requires to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought in the Court of Chancery in the State of Delaware or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our Certificate of Incorporation. In addition, our Certificate of Incorporation and Bylaws provide that the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act and the Exchange Act. Neither the exclusive forum provisions nor the federal securities laws (and the rules and regulations thereunder) may be waived by a stockholder.
In March 2020, the Delaware Supreme Court issued a decision in Salzburg et al. v. Sciabacucchi, which found that an exclusive forum provision providing for claims under the Securities Act to be brought in federal court is facially valid under Delaware law. We intend to enforce this provision, but we do not know whether courts in other jurisdictions will agree with this decision or enforce it.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims and, if a stockholder were to bring such a claim, the choice of forum provision may result in the stockholder incurring increased costs in connection with bring such a claim as such stockholder will be required to bring the claim in the state or federal courts located in the State of Delaware. Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, operating results, and financial condition.
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Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our common stock.
Our Certificate of Incorporation and Bylaws contain provisions that could delay or prevent a change in control of the Company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
| ● | authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; |
| ● | prohibiting cumulative voting in the election of directors; |
| ● | providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; |
| ● | prohibiting stockholder action by written consent; |
| ● | limiting the persons who may call special meetings of stockholders; and |
| ● | requiring advance notification of stockholder nominations and proposals. |
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. These and other provisions in our Certificate of Incorporation and Bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of common stock and result in the market price of common stock being lower than it would be without these provisions.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our common stock, our share price and trading volume could decline.
The trading market for our common stock will depend on the research and reports that securities or industry analysts publish about us, our business, or our market. Currently, we do not have any analyst coverage and may not obtain analyst coverage in the future. In the event we obtain analyst coverage, we will not have any control over such analysts. If one or more of the analysts who cover us downgrade the common stock or change their opinion of such shares, the share price of the common stock would likely decline. If one or more of these analysts cease coverage of the Company or fail to regularly publish reports on the Company, we could lose visibility in the financial markets, which could cause the share price or trading volume of the common stock to decline.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act. Emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. As an emerging growth company, we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our stock less attractive because we may rely on these provisions. If some investors find our stock less attractive as a result, there may be a less active trading market for our shares and our stock price may be more volatile.
We will remain an emerging growth company until the earliest of (i) the end of the fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second fiscal quarter, (ii) the end of the fiscal year in which we have total annual gross revenues of $1.235 billion or more during such fiscal year, (iii) the date on which we issue more than $1 billion in non-convertible debt in a three-year period, or (iv) the end of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement filed under the Securities Act.
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Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Our Certificate of Incorporation and Bylaws provides that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law.
In addition, as permitted by Section 145 of the DGCL, our Bylaws and our indemnity agreements that we entered into with our directors and officers provide that:
| ● | We will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; |
| ● | We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; |
| ● | We will be required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; |
| ● | We will not be obligated pursuant to our Bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors; |
| ● | the rights conferred in our Bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and |
| ● | we may not retroactively amend our Bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents. |
Risks Related to Finances and Capital Requirements
We will require substantial additional funding in the future, which may not be available to us on acceptable terms, or at all, and, if not so available, may require us to delay, limit, reduce, or cease our operations.
Our operations have consumed substantial amounts of cash since our inception. As of December 31, 2025, we had an accumulated deficit of $68.3 million and our net loss was $39.2 million for the fiscal year ended December 31, 2025. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Our business will require substantial additional capital for implementation of our long-term business plan and development of clinical assets. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the U.S. As we require additional funds, we may seek to fund our operations through the sale of additional equity securities, debt financing, and/or strategic collaboration agreements. We cannot be sure that additional financing from any of these sources will be available when needed or that, if available, the additional financing will be obtained on favorable terms.
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Our future funding requirements will depend on many factors, including, but not limited to:
| ● | the progress, timing, scope, and costs of our clinical trials, including the ability to timely enroll patients in our potential future clinical trials; |
| ● | the outcome, timing, and cost of regulatory approvals by the FDA and comparable regulatory authorities, including the potential that the FDA or comparable regulatory authorities may require that we perform more studies than those that we currently expect; |
| ● | the amount of revenues, if any, from our current clinical assets or any future clinical assets; |
| ● | the terms and timing of any potential future collaborations, licensing, or other arrangements that we may establish; |
| ● | cash requirements of any future acquisitions and/or the development of other clinical assets; |
| ● | the costs of operating as a public company; |
| ● | the time and cost necessary to respond to technological and market developments; |
| ● | any disputes which may occur between us, employees, collaborators, or other prospective business partners; and |
| ● | the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights |
On April 15, 2026, the last quoted sale price for our common stock as reported on Nasdaq was $4.88 per share. Currently, the exercise prices of the Company’s Public Warrants are significantly greater than the current market price of our common stock. Accordingly, such Public Warrants are unlikely to be exercised and therefore the Company does not expect to receive any proceeds from such exercise of the warrants in the near term. Whether any holders of Public Warrants determine to exercise such Public Warrants, which would result in cash proceeds to the Company, will likely depend upon the market price of our common stock at the time of any such holder’s determination.
If we are unable to raise additional capital when needed, we may be required to curtail the development of our technology or materially curtail or reduce our operations. We could be forced to sell or dispose of our rights or assets. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results of operations, and financial condition, including the possibility that a lack of funds could cause our business to fail and our Company to dissolve and liquidate with little or no return to investors.
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We will continue to incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
As a publicly traded company, we will incur significant legal, accounting, and other expenses under the Exchange Act, the Sarbanes-Oxley Act, and other applicable securities rules and regulations. In addition, new and changing laws, regulations, and standards relating to corporate governance and public disclosure, including the Dodd Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act, the JOBS Act, and the rules and regulations of the SEC and national securities exchanges have created uncertainty for public companies and increased the costs and the time that our board of directors and management must devote to complying with these rules and regulations. We expect these rules and regulations to increase our legal and financial compliance costs and will divert management time and attention from revenue generating activities.
Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations, and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a publicly traded company. However, the measures we take may not be sufficient to satisfy our obligations as a publicly traded company.
For as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may remain an “emerging growth company” until the earliest of (i) the last day of our fiscal year following February 7, 2027 (the fifth anniversary of the consummation of the SPAC IPO), (ii) the last day of the fiscal year in which the market value of our shares of common stock that are held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (iii) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation) or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt in the prior three-year period. Further, there is no guarantee that the exemptions available to us under the JOBS Act will result in significant savings. To the extent we choose not to use exemptions from various reporting requirements under the JOBS Act, we will incur additional compliance costs, which may impact earnings.
We may issue additional shares of common stock or preferred stock, including issuances upon exercise of outstanding pre-funded warrants, in connection with capital raising transactions and under an employee incentive plan or under our existing at the market offering program, which would dilute the interest of our stockholders.
We may issue a substantial number of additional shares of common or preferred stock pursuant to the exercise of previously issued pre-funded warrants, under an employee incentive plan or under our ongoing at the market offering program. The issuance of additional shares of common or preferred stock:
| ● | may significantly dilute the equity interest of investors; |
| ● | may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| ● | could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and |
| ● | may adversely affect prevailing market prices for the common stock. |
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
The Company has engaged a third-party service provider to implement comprehensive IT and cybersecurity policies, including Guardz, Cyber Essentials, and others. These initiatives are supported by detailed policies and staff training programs, which have strengthened the Company’s IT framework and improved compliance.
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In
light of the pervasive and increasing threat from cyberattacks, the Company’s
As
of the date of this Annual Report, the Company is not aware of any risks from cybersecurity threats that have
Item 2. Properties
We currently operate as a virtual company, but also lease property in the United Kingdom. On March 7, 2024, we entered into a lease for laboratory space at Cambridge Science Park. Rent is £92,925 per annum, the equivalent of approximately $10,000 per month. The lease runs until January of 2027, and the laboratory space is intended to provide us with the ability to extend or develop proprietary solid-form intellectual property for existing and future clinical assets.
Item 3. Legal Proceedings
In August 2023, prior to the Business Combination, our now wholly-owned subsidiary, Conduit Pharmaceuticals Limited (“CPL”), received a letter from Strand Hanson Limited (“Strand”) claiming it was owed advisory fees pursuant to a previously executed letter. CDT rejected and disputes the substance of the letter in full. Following such rejection, on September 7, 2023, Strand filed a claim in the Business and Property Courts of England and Wales claiming it is entitled to be paid the sum of $2 million and, as a result of the completion of the Business Combination, to be issued 21 shares of common stock. In 2024, the Company offered a $0.4 million settlement to Strand Hanson to avoid expensive litigation, thereby booking an estimated liability of $0.4 million in the accompanying financial statements. On December 8, 2025, the Company and Corvus Capital Limited (“Corvus”) entered into a Sale and Purchase Agreement (the “Agreement”) for the issuance of all of the outstanding shares of CPL held of record by the Company to Corvus. The Company sold CPL, including the potential liability associated with the litigation, to Corvus, a wholly-owned subsidiary of the Company’s Chief Executive Officer for a settlement amount of $7 million that was satisfied through the issuance of shares and pre-funded warrants. On or about January 13, February 20, 2026 and March 4, 2026, CDT received correspondence from Strand, in which, Strand seeks to recover from CDT a judgment it obtained against CPL from the High Court of England and Wales on December 16, 2025 (the “Judgment”), in the amount of approximately $7 million, plus interest and repayment of a fraction of Strand’s costs. CDT denies any and all liability.
On December 18, 2024, Conduit UK Management Limited (“Conduit UK”) received a notification from the UK Intellectual Property Office (“UK IPO”) notifying the company that St George Street Capital had initiated patent entitlement proceedings with respect to patent application PCT/IB2022/00775 (“Patent Application”). Conduit UK refutes the claims made by St George Street Capital and filed a counterstatement on February 26, 2025 with the UK IPO. In addition, each of the three inventors named in the Patent Application filed simultaneous counterstatements fully supporting Conduit UK’s position, and assertions that the claims are without merit. Further updates will be made following notification by the UK IPO.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
(a) Market Information
Our common stock and warrants are traded on The Nasdaq Capital Market under the symbols “CDT” and “CDTTW”, respectively. Prior to the completion of the Business Combination, the securities of MURF were listed on The Nasdaq Global Market under the symbols “MURFU,” “MURF,” and “MURFW”, all of which are no longer listed on The Nasdaq Global Market.
On April 14, 2026, the last quoted sale price for our common stock as reported on Nasdaq was $4.77 per share.
(b) Holders
As of April 14, 2026, there were approximately 400 holders of record of our common stock. Such numbers do not include beneficial owners holding our securities through nominee names.
(c) Dividends
We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends for the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our financial condition, operating results, current and anticipated cash needs, plans for expansion, and other factors that our board of directors may deem relevant.
(d) Securities Authorized for Issuance Under Equity Compensation Plans
Reference is made to the information contained in the Equity Compensation Plan table contained in Item 11 of this Annual Report.
(e) Recent Sales of Unregistered Securities
There were no unregistered sales of equity securities which have not been previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K since January 1, 2025.
(f) Use of Proceeds from Registered Offerings
None.
(g) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 6. [Reserved].
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with the other sections of this Annual Report on Form 10-K, including our audited financial statements for the year ended December 31, 2025, together with related notes thereto, included elsewhere in this Annual Report. The following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” or in other parts of this Annual Report and our other filings with the SEC. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. CDT Equity Inc. (formerly Conduit Pharmaceuticals Limited) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Murphy Canyon Acquisition Corp. (“MURF”) on November 8, 2022. The transaction contemplated by the terms of the Merger Agreement was completed on September 22, 2023, in conjunction with which MURF changed its name to Conduit Pharmaceuticals Inc. (hereafter referred to, collectively with is subsidiaries as “CDT”, “CDT Equity”, the “Company”, “we”, “us” or “our”, unless the context otherwise requires. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.
Overview
On September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old Conduit”), Murphy Canyon Acquisition Corp (“MURF”) and Conduit Merger Sub, Inc., a Cayman Islands exempted company and a wholly owned subsidiary of MURF (“Merger Sub”), was completed pursuant to the Agreement and Plan of Merger, dated November 8, 2022, as amended, (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, at the closing, (i) Merger Sub merged with and into Old Conduit, with Old Conduit surviving the Business Combination as a wholly-owned subsidiary of MURF, and (ii) MURF changed its name from Murphy Canyon Acquisition Corp. to Conduit Pharmaceuticals Inc. Effective August 5, 2025, the Company changed its name from Conduit Pharmaceuticals Inc. to CDT Equity Inc. Our change to CDT Equity Inc. reflects the evolution of our strategy as a data-driven biotech development company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships.
CDT Equity is a data-driven biotech development company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships. The Company has evolved into a broader, more agile platform that leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development of novel therapeutic treatments.
CDT Equity’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by larger pharmaceutical companies with strong, supporting Phase I safety data. Through advanced co-crystallization and solid-form technologies developed at our Cambridge facility, we aim to improve drug properties and have successfully extended the patent life of certain drugs by up to 20 years.
Our current pipeline includes candidates targeting inflammatory and autoimmune disorders, as well as idiopathic male infertility, dermatology, and animal health. The intellectual property portfolio comprises pending patent applications in several international jurisdictions describing a solid-form compound, including the AZD1656 Cocrystal (a HK-4 Glucokinase Activator). Our pipeline research includes a number of additional compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which we have identified as potential opportunities to develop further intellectual property positions through solid-form technology.
Our collaboration with Sarborg enables us to apply proprietary algorithms utilizing AI-powered disease mapping to identify novel re-purposing opportunities across a database of more than 3,000 disease signatures. Sarborg’s insights have directly informed two new combination patent filings, strengthening our intellectual property portfolio. In addition, CDT Equity has initiated pre-clinical in-vitro models to explore new indications, guided by AI-insights without human intervention. We will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, entering into agreements with third parties to pursue further development, FDA approval, commercialization, and marketing of our assets.
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The Sarborg Agreement entered into between the Company and Sarborg on December 12, 2024 is designed to address longstanding challenges in the pharmaceutical sector, in particular by reducing human error in critical decision-making processes in both clinical development and asset identification. By integrating Sarborg’s algorithmic AI/cybernetics technology, CDT Equity aims to enhance efficiency, lower costs, and accelerate timelines by minimizing human intervention, ultimately optimizing the drug development cycle and giving CDT Equity a competitive advantage in the sector.
Through this relationship, CDT Equity will gain access to cutting-edge predictive models and dashboards, enabling the Company to evaluate drug candidates, streamline clinical trials, and optimize asset management with real-time data. These tools will drive faster, more accurate decisions, improving efficiency and reducing costs. By leveraging these insights, CDT Equity can differentiate itself in a competitive sector and gain unique data-driven insights that position the Company for success across both its current and future asset portfolio.
A further partnership with Manoira enables CDT Equity to expand the scope of its drug portfolio into the animal health market in a cost-efficient manner. This collaboration allows us to accelerate the understanding of the mechanism of action, safety, and potential efficacy of its portfolio across multiple species, while retaining 100% ownership of all data and intellectual property generated relating to human applications. This is expected to enhance the core human therapeutic pipeline but also opens potential new revenue streams in the high-growth veterinary market.
Repositioning CDT Equity enables the Company to explore multiple opportunities in the healthcare, biotech, artificial intelligence and broader technology innovation. The Board continues to evaluate an artificial intelligence led strategy, collaborating with consultants to best advise a growing market which has seen significant recent activity and success for respective stakeholders. Long-term exposure to artificial intelligence can present both strategic and financial benefits as part of a diversified capital management approach.
Operating with a lean disease-agnostic model, CDT Equity prioritizes speed, adaptability, and capital efficiency. We avoid the cost burden of late-stage clinical trials, focusing instead on high-leverage development strategies. Led by highly experienced executives: Dr. Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair of the Company’s Board; Dr. Andrew Regan, CEO and James Bligh, CFO. Our management team includes active senior scientists who have an extensive understanding of the pharmaceuticals market, supporting our strategy of developing clinical assets in a cost-efficient manner focused on therapeutic efficacy.
In 2024, AstraZeneca granted a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for development and commercialization of the Licensed Products under the related License Agreement. The Company is required to use commercially reasonable efforts to develop and commercialize the Licensed Products.
AstraZeneca has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further development. As the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to use the safety data generated in these clinical trials to assess which clinical assets to further develop and re-purpose.
Furthermore, CDT Equity is well positioned to pursue, and intends to pursue additional relationships and/or partnerships with third parties to license assets which are currently deprioritized. We plan to focus our efforts on developing clinical assets to address disorders that impact large populations where there is no present treatment or the existing treatments carry significant unwanted side effects.
Reverse Stock Split
During the year ended December 31, 2025, the Company effected three reverse stock splits of its common stock pursuant to amendments to the Company’s Second Amended and Restated Certificate of Incorporation that were previously approved by the Company’s stockholders and authorized by the Board of Directors. The reverse stock splits were implemented as follows: a 1-for-100 reverse stock split effective January 24, 2025, a 1-for-15 reverse stock split effective May 19, 2025, and a 1-for-8 reverse stock split effective October 10, 2025.
On March 26, 2026, the company effected a 1-for-25 reverse stock split. No fractional shares were issued in connection with the reverse stock splits. Stockholders who otherwise would have been entitled to receive fractional shares received cash in lieu of fractional shares based on the applicable post-split trading price of the Company’s common stock. All references to numbers of shares of common stock and per-share information in this Annual Report on Form 10-K have been adjusted retroactively, as appropriate, to reflect the reverse stock split.
Reverse stock splits were applied sequentially at their respective effective dates (resulting in a cumulative effect equivalent to an approximate 1-for-300,000 reverse stock split).
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The reverse stock splits automatically combined the Company’s issued and outstanding shares of common stock at the applicable ratios without affecting the number of authorized shares of common stock or the par value of $0.0001 per share. No fractional shares were issued in connection with the reverse stock splits. Stockholders who otherwise would have been entitled to receive fractional shares received cash in lieu of fractional shares based on the applicable post-split trading price of the Company’s common stock.
As a result of the aggregate of the reverse stock splits, every 300,000 shares of our common stock issued or outstanding were automatically reclassified into and became one new share of common stock. The number of our issued and outstanding shares of common stock, when accounting for the reverse stock splits, was 92,140 and 461 shares as of December 31, 2025 and December 31, 2024, respectively.
In accordance with ASC 260, Earnings Per Share, all historical share and per-share amounts presented in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect the effect of the reverse stock splits for all periods presented. Accordingly, all references to common stock share amounts and per-share information in this Annual Report on Form 10-K have been retroactively adjusted, as applicable, to reflect the reverse stock splits.
Key Component of Result of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the research and development of our candidates and programs. We expense research and development costs and intangible assets acquired that have no alternative future use as incurred. These expenses include:
| ● | personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in research and development functions; | |
| ● | expenses incurred in connection with the clinical development and regulatory approval of our clinical assets, including under agreements with third parties, such as consultants, contractors and CROs; | |
| ● | license fees with no alternative use; and | |
| ● | other expenses related to research and development. |
We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.
Our research and development activities have been wholly focused on developing co-crystals of AZD1656 to increase patent life. Some of this work was completed by third-party CROs but all intellectual property is retained by us. We currently have one pending international patent application and two pending national patent applications. The successful completion of clinical trials increases the value of clinical assets and may lead to the commercialization and/or licensing of such assets to other pharmaceutical companies. There is no assurance that any clinical trials on the assets owned or licensed by us will be successful.
General and Administrative Expenses
General and administrative expenses consist of salaries and other related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, and other operating costs.
We anticipate that our general and administrative expenses will increase substantially for the foreseeable future as we increase our administrative headcount to operate as a public company and as we advance clinical assets through clinical development. We also will incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq listing rules, additional insurance expenses, investor relations activities and other administrative and professional services. In addition, if regulatory approval is obtained for clinical assets, we expect to incur expenses associated with building a sales and marketing team.
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Other Income (Expenses)
Other income (expenses), net
Other income (expense), net consists of change in the fair value of options, change in fair value of convertible notes, and expense incurred upon the issuance of warrants during the year.
Interest expense, net
Interest expense, net consists primarily of interest expense on convertible loan notes and promissory notes and interest expense on deferred commissions payable to an advisor for fees related to the merger, as well as a small amount of interest income on cash and cash equivalents held by the Company.
Results of Operations
The following table set forth our results of operations for the periods indicated:
Years ended December 31, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Research and development expenses | $ | 5,054 | $ | 3,378 | $ | 1,676 | 50 | % | ||||||||
Research and development expenses increased by approximately $1.7 million, or 50%, to approximately $5.1 million for the year ended December 31, 2025, as compared to approximately $3.4 million for the year ended December 31, 2024. The increase was primarily driven by an increase of $4.2 million related to work performed under the Sarborg agreements, a $0.3 million increase related to Thesprogen, a $0.2 million increase related to Charles River and a $0.1 million increase related to Manoira, partially offset by a $3.1 million decrease related to an upfront payment to AstraZeneca with no comparable activity in 2025.
General and administrative expenses
Years ended December 31, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| General and administrative expenses | $ | 31,703 | $ | 12,041 | $ | 19,662 | 163 | % | ||||||||
General and administrative expenses increased by $19.7 million, or 163%, to approximately $31.7 million for the year ended December 31, 2025, as compared to approximately $12.0 million for the year ended December 31, 2024. The $19.7 million increase was primarily driven by a $9.6 million increase in litigation liability expense in relation to the Strand litigation, a $7.0 million increase in compensation expense associated with the issuance of common stock and pre-funded warrants as consideration for the sale of CPL, a $2.4 million increase in legal fees, and a $0.9 million increase in salaries and stock-based compensation, partially offset by a $0.2 million decrease in directors’ and officers’ (D&O) insurance costs.
Other expense, net
Years ended December 31, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Other expense, net | $ | (2,176 | ) | $ | (890 | ) | $ | (1,286 | ) | 144 | % | |||||
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Activity for the year ended December 31, 2025 consisted of a loss on the change in fair value of convertible notes of $2.7 million, a loss on the disposition of digital assets of $0.4 million, partially offset by a gain on the waiver of accrued interest of $0.4 million, a gain on debt extinguishment of $0.3 million, and a gain on the change in the fair value of warrant liability of $0.2 million.
Activity for the year ended December 31, 2024 consisted of a loss of debt extinguishment of $3.2 million and a loss on the issuance of warrants for lock-up of $2.7 million, partially offset by a gain on debt extinguishment of $2.5 million, a gain on the change in fair value of convertible notes of $2.0 million, a $0.3 million income tax refund and a gain on the change in the fair value of warrant liability of $0.2 million.
For further details refer to Note 17, “Other income (expense), net,” in the consolidated financial statements as of December 31, 2025 and 2024 included elsewhere in this Annual Report.
Interest expense, net
Years ended December 31, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Interest expense, net | $ | (319 | ) | $ | (1,506 | ) | $ | 1,187 | (79 | )% | ||||||
Interest expense, net changed by $1.2 million or 79%, to $0.3 million for the year ended December 31, 2025, from $1.5 million for the year ended December 31, 2024. The decrease was primarily attributable to a $0.9 million decrease in the amortization of debt issuance costs, debt discounts, and conversion costs, and a $0.4 million decrease in interest expense and conversion costs related to interest-bearing convertible promissory notes, partially offset by a $0.1 million increase in loan settlement fees.
Liquidity and Capital Resources
Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. Since our inception, and in line with our growth strategy, we have prepared our financial statements assuming we will continue as a going concern. Since our inception, we have incurred net losses and experienced negative cash flows from operations. To date, our primary sources of capital have been through private placements of equity securities and convertible debt and the Sales Agreement with A.G.P. During the years ended December 31, 2025 and 2024, we incurred operating losses of $36.8 million and $15.4 million, respectively.
Our primary uses of cash are to fund our operations as we continue to grow our business. We will require a significant amount of cash for expenditures as we invest in ongoing research and development and business operations. Until such time we can generate significant revenue from the successful approval and commercialization of a product candidate, we expect to finance our cash needs for ongoing research and development and business operations through public or private equity or debt financings or other capital sources, including strategic partnerships. However, we may be unable to raise additional funds or enter into such other arrangements, when needed, on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, or substantially reduce research and development efforts all of which could have a material adverse effect on the Company and its financial results.
While the Company believes in the viability of its ability to raise additional funds, there can be no assurances to that effect. We have based our estimates on assumptions of operating costs that may prove to be wrong. As a result, we could deplete our capital resources sooner than we currently expect. If, for any reason, our expenses differ materially from our assumptions or we utilize our cash more quickly than anticipated, or if we are unable to obtain funding on a timely basis we may be required to revise our business plan and strategy, which may result in significantly curtailing, delaying or discontinuing one or more of our research or development programs or the commercialization of any product candidates or may result in our being unable to expand our operations or otherwise capitalize on our business opportunities. As a result, our business, financial condition, and results of operations could be materially affected.
Management has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months from the date of the filing of this Annual Report. This is based on our analysis under applicable accounting principles. These financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
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Cash Requirements
Our material cash requirements include the following contractual and other obligations.
A.G.P Convertible Note
On November 25, 2024, the Company issued to A.G.P. a convertible promissory note (the “A.G.P. Convertible Note”) in the principal amount of $5.7 million to evidence the A.G.P.’s currently owed deferred commission payable. Unless earlier converted as specified in the Convertible Note, the principal amount plus all accrued but unpaid interest is due on November 25, 2025 (the “Maturity Date”). The A.G.P. Convertible Note accrues interest at 5.5% per annum.
At any time prior to the full payment of the A.G.P. Convertible Note, provided that the A.G.P. has given at least three business days written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount and all interest accrued converted into shares of the Company’s common stock, at the lower of the Reverse Split price and the market price per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as provided therein and to take into account any future share splits or reverse splits. However, the conversion of the A.G.P. Convertible Note may not occur prior to the Company having sufficiently authorized shares of common stock to permit the entire conversion of the convertible promissory note. Refer to Note 8 to our financial statements included elsewhere in this Annual Report.
During the year ended December 31, 2025, the holder of the A.G.P. Convertible Note converted $3.5 million of principal and interest into 18,711 shares of the Company’s Common Stock, respectively. As of December 31, 2025 and the date of filing the consolidated financial statements, approximately $2.5 million and $1.2 million, respectively, of principal and interest remained outstanding under the A.G.P. Convertible Note.
Working Capital
We currently anticipate that cash required for working capital for the next 12 months is approximately $10.0 million, which includes forecasted operating expenses of $6.3 million, accrued expenses and other current liabilities of $2.5 million, the A.G.P. Convertible Promissory Note payable, if not converted prior to maturity of $1.2 million and forecasted research and development costs of $60 thousand. We do anticipate being able to fund required working capital for the next 12 months with cash and cash equivalents on hand and current borrowings. Management believes that we will be able to fund cash required for the next 12 months through borrowings and equity raises. We have historically been able to access funds through the issuance of debt, and more recently the at the market offering program agreement and believe we can continue to obtain funding through such debt financing agreements and Sales agreement as needed to meet cash requirements for the next 12 months.
As of December 31, 2025, we have raised the full $23.9 million (net of fees) out of the $23.9 million available to us through the Sales agreement. We expect to raise additional funds from an updated at the market offering program agreement and ELOC over the next 12 months but can’t guarantee the additional funding from the at the market offering program agreement, ELOC and other potential debt and equity raises will cover the required cash required for working capital for the next 12 months.
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Cash Flows
The following table set forth our cash flows for the period indicated (in thousands):
| Years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash (used in) provided by: | ||||||||
| Operating Activities | $ | (15,555 | ) | $ | (9,682 | ) | ||
| Investing Activities | (808 | ) | (43 | ) | ||||
| Financing Activities | 17,422 | 6,067 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (104 | ) | (16 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | $ | 955 | $ | (3,674 | ) | |||
Cash Flows Used in Operating Activities
Net cash used in operating activities for the year ended December 31, 2025 was $15.6 million, resulting primarily from a net loss of $39.2 million, a gain on the waiver of accrued interest of $0.4 million, a gain on debt extinguishment of $0.3 million and a gain on the change in fair value of warrant liabilities of $0.1 million. This was partially offset by a $7.0 million compensation expense from the issuance of shares and warrants upon the sale of a previously controlled subsidiary, $4.7 million cash inflow from operating assets and liabilities, a $3.2 million cash inflow from the issuance of common stock for services, a $2.7 million loss on the change in fair value of convertible notes payable, $2.4 million of amortization expense, $2.2 million cash outflow of stock-based compensation, $1.4 million of amortization of directors and officers insurance, a $0.4 million loss on the change in fair value of digital assets, $0.3 million of non-cash interest expense and $0.1 million of non-cash lease expense. The $4.7 million cash inflow from operating assets and liabilities was primarily driven by a $9.6 million increase in accrued litigation liability, a $0.4 million cash inflow from accounts payable, partially offset by a $4.1 million cash outflow from prepaid expenses, $0.9 million cash outflow from accrued expenses and other liabilities, and other current assets and a $0.1 million cash outflow from lease liabilities.
Net cash used in operating activities for the year ended December 31, 2024 was $9.7 million, resulting primarily from a net loss of $17.8 million, a gain on the change in fair value of convertible notes payable of $2.0 million, a gain on change in fair value of warrant liabilities of $0.2 million and a $0.1 million cash outflow from operating assets and liabilities. This was partially offset by a $2.7 million loss on the issuance of warrants, $1.7 million of amortization of directors and officers insurance, a $1.6 million outflow attributable to the issuance of common stock for licensing rights, $1.6 million of stock-based compensation, $0.9 million of debt discount amortization, a $0.7 million loss on debt extinguishment, $0.5 million of non-cash interest expense, $0.4 million of amortization expense, a $0.2 million share issuance for services and a $0.1 million of non-cash lease expense. The $0.1 million cash outflow from operating assets and liabilities is primarily due to a $2.3 million cash outflow from prepaid expenses and other current assets and a $0.1 million cash outflow from lease liabilities, partially offset by a cash inflow of $1.2 million from accounts payable and a cash inflow of $1.0 million from accrued expenses and other current liabilities.
Cash Flows Used in Investing Activities
Net cash used in investing activities for the year ended December 31, 2025 was $0.8 million, consisting of $2.0 million of digital asset purchases and $0.4 million of equipment and clinical assets, partially offset by proceeds of $1.6 million from digital asset disposals.
Net cash used in investing activities for the year ended December 31, 2024 was $43 thousand, resulting from purchases of short-term investments of $0.5 million and purchases of property, plant and equipment of $0.1 million, partially offset by sales of short-term investments of $0.5 million.
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Cash Flows Provided by Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $17.4 million, resulting from $19.7 million of proceeds from the issuance of common shares under the ATM program, partially offset by $2.2 million of debt repayments and $0.1 million of treasury stock purchases.
Net cash provided by financing activities for the year ended December 31, 2024 was $6.1 million, resulting from proceeds from the issuance of common shares under the ATM program of $3.3 million, proceeds from the issuance of notes payable of $3.2 million, proceeds from the exercise of warrants of $0.2 million and proceeds from the issuance of warrants of $0.1 million, partially offset by repayments of notes payable of $0.8 million.
Contractual Obligations and Other Commitments
Laboratory Lease
As of December 31, 2025, we are the lessee under one laboratory space lease for a term of two years. The annual rent payments are $0.1 million for the years ending December 31, 2025 and December 31, 2026. The laboratory space lease has a remaining lease term of approximately one year.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
Fair Value of Convertible Notes
The Company has elected the fair value measurement option for convertible debt with embedded derivatives that would otherwise require bifurcation, and has recorded the entire hybrid financial instrument at fair value under the guidance in ASC 825, Financial Instruments. To value the convertible debt, the Company utilizes Binomial Lattice Pricing Models. The Binomial Lattice Pricing Models involve the construction of various intermediate lattices: stock price tree, conversion value tree, conversion probability tree, and discount rate tree. In doing so, we assume the holders act rationally to maximize return and minimize cost at each decision point. We computed the notes payoff at maturity and at intermediate decision nodes based upon the better of (i) conversion or (ii) repayment of principal and interest.
The significant inputs and assumptions used to estimate the fair value include: (i) the Company’s stock price, (ii) the term of the convertible debt, (iii) the sum of the notes’ principal and unpaid accrued interest, (iv) expected volatility, (v) risk-free interest rate, (vi) the corporate bond yield, (vii) the credit spread, (viii) probability of default, and (ix) the estimated recovery upon default. Any change to the unobservable inputs to estimate fair value could produce significantly higher or lower fair value measurements and result in a material change within the financial statements.
The convertible debt will subsequently be remeasured at fair value each reporting date until settled or converted.
Contingencies
In the ordinary course of business, we are involved in various legal proceedings that are complex in nature and have outcomes that are difficult to predict. We describe our legal proceedings and other matters that are significant or that we believe could become significant in Note 15 to the consolidated financial statements. We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously or modifications to contingency disclosures that are considered material.
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Recent Accounting Pronouncements
A discussion of recent accounting pronouncements is included in Note 3 - Basis of Presentation and Summary of Significant Accounting Policies to our financial statements included elsewhere in this Annual Report.
Emerging Growth Company Status and Smaller Reporting Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that: (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Upon closing of the Merger, the surviving company remained an emerging growth company, as defined by the Jumpstart Our Business Startups act of 2012, until the earliest of (i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s initial public offering, (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer, which means the market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0 million as of the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt securities during the prior three year period.
In addition, CDT Equity is a smaller reporting company as defined in the Exchange Act. The Company may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) CDT’s voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) CDT’s annual revenue is less than $100.0 million during the most recently completed fiscal year and its voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of its second fiscal quarter.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this item.
Item 8. Financial Statements and Supplementary Data
This information appears following Item 15 of this Annual Report and is included herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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Item 9A. Controls and Procedures
Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based on this evaluation, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of December 31, 2025.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our Management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting. In connection with the preparation and audit of the financial statements as of and for the fiscal year ended December 31, 2025, material weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Our management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded our system of internal control over financial reporting was not effective as of December 31, 2025 due to the following material weaknesses:
| ● | The segregation of duties is limited and heavily reliant on interim personnel and third-party consultants to perform these activities, including the lack of timely review and approval of travel and entertainment expenses. |
| ● | The Company lacks a formal process for review and approval of significant transactions and accounts on a contemporaneous basis and there have been numerous, recurring errors in account balances and disclosures. |
| ● | The Company has not designed adequate and appropriate internal controls under an appropriate internal control over financial reporting framework. |
| ● | The Company did not appropriately review and evaluate the accounting implications of all material transactions that occurred in the audit periods. |
| ● | The review controls around certain related party transactions did not operate consistently and the review of such transactions was not always contemporaneously documented. |
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If these material weaknesses are not remediated, it could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. We are reviewing measures designed to improve our internal control over financial reporting to remediate these material weaknesses, although they have not been fully remediated as of the date of this filing. We anticipate hiring additional qualified accounting personnel with experience with complex GAAP and SEC rules while, meanwhile, continuing to engage consultants to assist with our financial statement close process, segregating duties among accounting personnel to enable adequate review controls, further developing and documenting our accounting policies, and designing, implementing, and/or expanding IT systems and application controls in our systems relevant to the preparation of the consolidated financial statements. We also expect to engage an external advisor to assist with evaluating and documenting the design and operating effectiveness of internal controls and assisting with the remediation of deficiencies, as necessary if sufficient capital resources become available.
The ability to perform these remediation plans are dependent on our ability to enhance funding and liquidity. The primary costs associated with such measures are corresponding recruiting and additional salary and consulting costs, which are difficult to estimate but which may be significant. These additional resources and procedures are intended to enable us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control procedures.
The material weaknesses will not be considered remediated until a remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls, provided we are able to obtain sufficient capital resources to cover the cost of our remediation plan, are operating effectively. A failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock.
Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
During
the fiscal quarter ended December 31, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange
Act)
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Executive Officers and Directors
The following table sets forth certain information concerning our executive officers and directors as of April 15, 2026:
| Name | Age | Position | ||
| Andrew Regan | 60 | Chief Executive Officer and Director | ||
| James Bligh | 38 | Chief Financial Officer and Director | ||
| Freda Lewis-Hall | 71 | Chairperson of the Board of Directors | ||
| Chele Chiavacci Farley | 59 | Director | ||
| Simon Fry | 66 | Director |
Executive Officers
Andrew Regan. Dr. Andrew Regan, the founder and initial financial backer of Conduit Pharmaceuticals (now CDT Equity Inc.), was appointed Chief Executive Officer of the Company on April 15, 2025. Dr. Regan succeeds Dr. David Tapolczay, who stepped down as CEO and as a member of the Board of Directors for personal reasons, but will continue to serve the Company as Head of Strategy & Licensing.
Dr. Regan is a British born polar explorer and entrepreneur. He has served as a member of the Board since September 2023 and is a successful entrepreneur with an extensive background in founding and scaling innovative companies across sectors. Dr. Regan was a co-founder of Conduit Pharmaceuticals Limited (“Old Conduit”) and has served as a board member of Old Conduit since 2019. He also founded Corvus Capital Limited (“Corvus Capital”), an investment vehicle that was listed on the London Stock Exchange prior to being taken private in 2008 and has served as its Chief Executive Officer since then, overseeing its continued investments across several industries. Dr. Regan also has experience as an investor in a number of public and private companies, including ASOS.com Ltd, a global online fashion and beauty retailer, Virtual Internet, an IT services company that specializes in hosting infrastructure such as VMWare cloud hosting and Managed and Dedicated Servers, and Imperial Energy Corporation plc, an upstream oil and gas exploration and production company. Prior to that, Dr. Regan was the Chief Executive Officer of Hobson Plc, which was listed on the London Stock Exchange, until its sale in 1996 through a cash takeover.
Dr. Regan has a strong interest in the use of bio-inspired science to create solutions for present-day problems. In 2014, he was awarded a PhD from Oxford Brookes University for his research in writing and developing a bio-inspired algorithm for forecasting the financial markets. He is passionate about the polar regions and is an accomplished polar explorer having led a number of expeditions to both the Arctic and Antarctica. Dr. Regan was selected to serve on the Board following the business combination based on his knowledge of Old Conduit and his extensive experience in investing, financing, overseeing and developing companies.
Dr. Regan sits on the board of directors of Sarborg Limited (“Sarborg”), a significant stockholder of the Company, with which the Company, as previously disclosed, has entered into a Services Agreement (the “Sarborg Agreement”) with in December 2024. Since the beginning of this fiscal year, as previously disclosed in a Current Report to Form 8-K filed on April 4, 2025, on March 31, 2025, the Company entered into an additional license and use agreement with Sarborg (the “Additional Agreement”) covering certain additional deliverables and incorporating a new scope of work focused on analysis of CDT’s acquired AstraZeneca assets. Dr. Regan does not have an equity or ownership interest in Sarborg. Except for the Sarborg Agreement and the Additional Agreement, Dr. Regan has no direct or indirect material interest in any other transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
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James (“Jamie”) Bligh. Mr. Bligh has served as a member of our Board since September 2023. He served as the Company’s Interim CFO from May 2024 until August 4, 2025, when he was appointed permanent Chief Financial Officer. He was a co-founder of Conduit Pharmaceuticals Limited in 2019 and has served as a member of its board of directors since September 2023. From 2008 to 2019, Mr. Bligh worked closely with investment vehicle Corvus Capital Limited, including as a Partner, where he led a number of reverse takeover transactions, stock market listings, initial public offerings, secondary fundraisings, and merger transactions. Mr. Bligh’s prior transaction experience includes advising several special purpose acquisition vehicles in listing on the London Stock Exchange, including the listing of Bermele Plc, a special purpose acquisition vehicle, and the subsequent acquisition of Bermele by East Imperial Pte. Ltd., a global purveyor of ultra-premium beverages, in June 2019; the listing of Leverett Plc, which subsequently acquired Nuformix Plc, a pharmaceutical development company targeting unmet medical needs in fibrosis and oncology via drug repurposing; and Cizzle Biotechnology Holdings PLC, a UK-based diagnostics developer. Jamie previously served as a director of Bermele Plc from June 2021 through February 2022; Mertz Plc from January 2021 through March 2022. Jamie graduated from the University of Bristol with a BSc in Economics & Finance. Mr. Bligh was selected to serve on our board of directors following the Business Combination based on his past experience with business development, capital raising, financings, public offerings and other strategic transactions, including mergers and acquisitions.
Directors
Freda Lewis-Hall, M.D., DFAPA. Dr. Lewis-Hall has served as a member of our Board since September 2023. She served as Senior Medical Advisor to the CEO of Pfizer Inc., or Pfizer, from December 2019 until her retirement in March 2020. Before assuming that responsibility, beginning January 2019, Dr. Lewis-Hall served as Chief Patient Officer and Executive Vice President of Pfizer. Dr. Lewis-Hall served as Pfizer’s Chief Medical Officer from 2009 to January 2019. Prior to joining Pfizer in 2009, Dr. Lewis-Hall held various senior leadership positions including Chief Medical Officer and Executive Vice President, Medicines Development at Vertex Pharmaceuticals Incorporated from June 2008 to May 2009; Senior Vice President, U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Company from 2003 until May 2008; Vice President Research and Development at Pharmacia Corporation from 2002-2003; Product Team Leader at Pharmacia and Eli Lilly and Company from 1998 to 2002; Director of Lilly Center for Women’s Health from 1996-1999; and Clinical Research Physician at Eli Lilly from 1994 through 1996. In October 2021, Dr. Lewis-Hall became a member of the board of directors for Pyxis Oncology (Nasdaq: PYXS), (where she serves as a member of the Nominating and Corporate Governance Committee); she serves as a member of the board of directors for Milliken & Company since July 2019, as a member of the Audit and HR and Compensation Committees; and as a member of the board of directors of SpringWorks Therapeutics, Inc. (Nasdaq GS: SWTX) since 2017, where she serves as the chair of the Nominating and Governance Committee and as a member of the audit committee. Dr. Lewis-Hall served as a member of the board of directors for Exact Sciences Corporation (Nasdaq: EXAS) from April 2020 to June 2024 where she served as a member of the Human Capital and Innovation, Technology and Pipeline Committees; a member of 1LifeHealthCare, Inc. (Nasdaq: ONEM) board from November 2019 to 2023, serving as a member of the Nominating and Corporate Governance Committee; she also served as a member of the board of directors for Tenet Healthcare Corporation (NYSE: THC) from 2014 to 2017.
Dr. Lewis-Hall holds an M.D. from Howard University College of Medicine and a B.A. in natural sciences from the Johns Hopkins University. The Company believes Dr. Lewis-Hall is qualified to serve on the Board based on her expertise and experience in the biopharmaceutical industry and her leadership experience as a senior executive at various biopharmaceutical companies.
Chele Chiavacci Farley. Chele Chiavacci Farley. Ms. Chiavacci Farley has served on our board of directors since the closing of our initial public offering. Ms. Farley currently serves as a Partner and Managing Director of Mistral Capital International, a middle-market private equity fund that has invested over $1.6 billion since its inception and that she has been a part of since 1995, where she focuses on private equity investments and strategic advisory across a range of sectors. During her tenure at Mistral Capital International, Ms. Farley has completed transactions with Goldman Sachs, Starwood Capital and Royal Dutch Shell.
Ms. Farley is a Director of a Nasdaq-listed special purpose acquisition company, General Purpose Acquisition Corp, where she is Chair of the Nominating and Corporate Governance Committee. She is also a member of the Board of Directors of the WordPress Foundation, which supports open-source initiatives and digital literacy worldwide, and a member of the Board of Directors of Palmilla San Jose Inmobiliara, a real estate resort development in Cabo San Lucas. Earlier in her career, Ms. Farley held merchant banking and investment banking roles at UBS Capital and Goldman Sachs, where she advised on capital markets transactions and mergers and acquisitions.
Ms. Farley graduated from Stanford University with a B.S. and M.S. in Industrial Engineering. We believe Ms. Farley’s expansive financial background and past experience with business development and capital raising make her well qualified to serve as a member of our board of directors.
Simon Fry. Mr. Fry has served as a member of our board of directors since November 2024. Mr. Fry has over 30 years’ experience in investment banking having held senior executive positions at various top-tier institutions, such as Nomura and Credit Suisse First Boston. In 2003, Mr. Fry was appointed as Chief Executive Officer at Crosby Asset Management. He previously worked at Nomura, where he was Managing Director and European Board member, as well as a member of the risk committee and credit committee. During his time at Nomura, Mr. Fry initiated and built the Company’s Asset Investment Group, whose focus was to create specific product and strategy groups within it to invest in mis-priced and undervalued credit and equity exposures. During this period, Mr. Fry was also responsible for building Nomura’s highly regarded International Markets Division, which was responsible for all the European capital market activity in equity, fixed income and derivatives including primary origination. Prior to this, Mr. Fry spent 14 years at Credit Suisse First Boston (CSFB) trading a variety of securities including both fixed income and equities. From 1990, Mr. Fry developed CSFB’s Asset Trading Group, and as Managing Director built a team that generated significant returns over a number of years for CSFB. Mr. Fry is based in Los Angeles. His expertise in capital markets and strategic asset management is expected to contribute to CDT’s growth goals as the company pursues development-ready assets and aims to enhance shareholder value.
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Board Composition
Our business and affairs are organized under the direction of our board of directors. The board of directors will meet on a regular basis and additionally as required. In accordance with the terms of the amended and restated certificate of incorporation, the board of directors may establish the authorized number of directors from time to time by resolution. Our board of directors currently consists of seven directors.
Director Independence
Under the Nasdaq listing standards, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by the board of directors. The Company’s board of directors affirmatively determined that all of the Company’s directors, except for Messrs. Bligh and Regan are independent directors within the meaning of the applicable Nasdaq listing standards. A majority of the members of the board of directors and all members of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are independent directors under the applicable Nasdaq listing standards.
Board Leadership Structure
The board of directors is responsible for the control and direction of the Company. We separate the positions of Chairperson of the board of directors and Chief Executive Officer of the Company. Dr. Lewis-Hall serves as the Chairperson of the board of directors and Dr. Regan serves as the Chief Executive Officer of the Company and as a member of the board of directors. The board of directors believe that this structure serves us well by maintaining a link between management, through Dr. Regan’s membership on the board of directors, and the non-executive directors led by Dr. Lewis-Hall in her role as a non-executive Chairperson.
Board Oversight of Risk
One of the key functions of our board of directors is to conduct informed oversight of our risk management process. The board of directors does not anticipate having a standing risk management committee, but rather administers this oversight function directly through the board of directors as a whole, as well as through various standing committees of the board of directors that address risks inherent in their respective areas of oversight. In particular, the board of directors will be responsible for monitoring and assessing strategic risk exposure and the Audit Committee will have the responsibility to consider and discuss the Company’s major financial risk exposures and the steps our management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements. The Compensation Committee assesses and monitors whether our compensation plans, policies, and programs comply with applicable legal and regulatory requirements.
Committees of the Board of Directors
The board of directors has formed the committees described below. Each of the committees operates pursuant to a written charter adopted by the committee or our board of directors. Each charter sets forth the committee’s specific functions and responsibilities. The board of directors may from time to time establish other committees.
Audit Committee
The Audit Committee assists the board of directors with its oversight of the integrity of the financial statements; the compliance with legal and regulatory requirements; the qualifications, independence and performance of the independent registered public accounting firm; the design and implementation of the financial risk assessment and risk management. Among other things, the Audit Committee is responsible for reviewing and discussing with management the adequacy and effectiveness of disclosure controls and procedures. The Audit Committee also discusses with management and independent registered public accounting firm the annual audit plan and scope of audit activities, scope, and timing of the annual audit of the financial statements, and the results of the audit, quarterly reviews of the financial statements and, as appropriate, initiates inquiries into certain aspects of the financial affairs.
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The Audit Committee is responsible for establishing and overseeing procedures for the receipt, retention, and treatment of any complaints regarding accounting, internal accounting controls or auditing matters, as well as for the confidential and anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee has direct responsibility for the appointment, compensation, retention, and oversight of the work of the independent registered public accounting firm. The Audit Committee has sole authority to approve the hiring and discharging of the independent registered public accounting firm, all audit engagement terms and fees and all permissible non-audit engagements with the independent auditor. The Audit Committee reviews and oversees all related party transactions in accordance with policies and procedures.
The Audit Committee is comprised of three members: Ms. Farley (Chairperson), Dr. Lewis-Hall and Mr. Fry. Each member of the Audit Committee meets the requirements for independence under the current Nasdaq and SEC rules and regulations and each member is financially literate. In addition, the board of directors has determined that each of Ms. Farley and Mr. Fry is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act.
Compensation Committee
The Compensation Committee assists the board of directors with its oversight of the forms and amount of compensation for executive officers (including officers reporting under Section 16 of the Exchange Act), the administration of equity and non-equity incentive plans for employees and other service providers and certain other matters related to compensation programs. The Compensation Committee, among other responsibilities, evaluates the performance of our Chief Executive Officer and, in consultation with the Chief Executive Officer, evaluates the performance of other executive officers (including officers reporting under Section 16 of the Exchange Act).
The Compensation Committee is comprised of two members: Dr. Lewis-Hall and Mr. Fry (chairperson). The composition of the Compensation Committee meets the requirements for independence under the current Nasdaq and SEC rules and regulations. Each member of the Compensation Committee is a “non-employee” director within the meaning of Rule 16b-3 promulgated under the Exchange Act.
Nominating and Governance Committee
The Nominating and Corporate Governance Committee assists the board of directors with its oversight of and identification of individuals qualified to become members of the board of directors, consistent with criteria approved by the board of directors, and selects, or recommends that the board of directors selects, director nominees; develops and recommends to the board of directors a set of corporate governance guidelines; oversees the evaluation of the board of directors; and reviews the environmental, safety, sustainability, and corporate social responsibility policies, objectives, and practices on a periodic basis.
The Nominating and Corporate Governance Committee is comprised of three members: Dr. Lewis-Hall (Chairperson) Ms. Chiavacci Farley, and Mr. Fry. The composition of the Nominating and Corporate Governance Committee meets the requirements for independence under the current Nasdaq and SEC rules and regulations.
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee was at any time during fiscal year 2025, or at any other time, one of our officers or employees. None of our executive officers have served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of our board of directors or member of our Compensation Committee.
Family Relationships
There are no family relationships among our directors and executive officers.
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Code of Conduct
We adopted a written Code of Conduct applicable to all of our directors, officers, and employees, which is available on the Company’s website at http://www.cdtequity.com. Our Internet website address is provided as an inactive textual reference only. The Code of Conduct covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of property and information, and compliance with legal and regulatory requirements. The Code of Conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of its Code of Conduct on its corporate website.
Director and Officer Liability and Indemnification
We have purchased directors’ and officers’ liability insurance and have entered into indemnification agreements with each of directors and executive officers. The indemnification agreements and our amended and restated certificate of incorporation and amended and restated by laws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law.
Insider Trading Policy
The use of material non-public information in securities transactions or the communication of such information to others who use it in securities trading (“Tipping”) violates the federal securities laws. Such violations are likely to result in harsh consequences for the individuals involved including exposure to investigations by the SEC, criminal and civil prosecution, disgorgement of any profits realized or losses avoided through use of the non-public information and penalties equal to three times such profits or losses. Further, insider trading violations expose the Company, its management, and other personnel acting in supervisory capacities to potential civil liabilities and penalties for the actions of employees under their control who engage in Insider Trading violations.
Our Insider Trading Policy (the “Insider Trading Policy”) prohibits our executive officers, the non-employee members of our board of directors and certain other employees from engaging in the following transactions:
| ● | selling any of our securities that they do not own at the time of the sale (referred to as a “short sale”); |
| ● | passing material nonpublic information on to others or recommending that another engage in transactions in any securities that they have information on; |
| ● | buying or selling puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engaging in any other hedging transaction with respect to our securities; |
| ● | using our securities as collateral in a margin account; and |
| ● | pledging our securities as collateral for a loan (or modifying an existing pledge). |
While
the Company has
On or around August 14, 2024, the Company was first made aware that one of its directors, through a wholly owned subsidiary, had previously entered into certain collateral pledge agreements that resulted in the disposition of a substantial amount of shares in the Company pursuant to those agreements without the Company’s knowledge. In addition, the Company also became aware that approximately 100 shares (or 31% of our then outstanding common stock as of August 14, 2024) were subject to a further third-party pledge arrangement with a then significant stockholder of the Company. Upon learning of these transactions, the board of directors has appointed an independent committee of the board of directors (the “Special Committee”) and delegated to the Special Committee the authority to review these matters and determine action(s), if any, to be taken by the Company in response thereto. Additionally, the Company formed another committee of the board of directors (the “Trading Review Committee”) and delegated to the Trading Review Committee the authority to investigate and review the trading patterns of certain of the Company’s stockholders and determine action(s), if any, to be taken by the Company in response thereto. The Company values its stockholders and wants to have all available data at its disposal to act in its fiduciary capacity.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2025, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with, except for one Form 3, reporting one transaction, filed by Sarborg Ltd. on May 7, 2025, two Form 4s filed by Andrew Regan, reporting two transactions as filed on June 13, 2025 and December 22, 2025, one Form 4 filed by Chele Chiavacci Farley, reporting one transaction, on August 26, 2025, one Form 4 filed by Freda C. Lewis-Hall, reporting one transaction, on August 26, 2025, and one Form 4 filed by Simon Fry, reporting one transaction, on August 26, 2025. Late reports amounted to one for Sarborg Ltd, two for Andrew Regan, one for Chele Chiavacci Farley, one for Freda C. Lewis-Hall, and one for Simon Fry.
Item 11. Executive Compensation
Fiscal 2025 Summary Compensation Table
The following table summarizes the compensation earned by or paid to our principal executive officer, our former principal executive officer, and our principal financial officer, who constitute all of our executive officers for fiscal 2025 and fiscal 2024. We have no defined benefit or actuarial pension plan, and no deferred compensation plan.
| NAME AND PRINCIPAL POSITION | FISCAL YEAR | SALARY (1) ($) | Bonus (2) ($) | STOCK AWARDS (3) ($) | OPTION AWARDS (4) ($) | NONEQUITY INCENTIVE PLAN COMPENSATIONS ($) | ALL OTHER COMPENSATION (5) | TOTAL ($) | ||||||||||||||||||||||||
| Andrew Regan(6) | 2025 | $ | - | $ | 400,110 | $ | 768,686 | $ | - | $ | - | $ | 7,000,000 | $ | 8,168,796 | |||||||||||||||||
| David Tapolczay | 2025 | $ | 391,506 | $ | 127,000 | $ | - | $ | - | $ | - | $ | - | $ | 518,506 | |||||||||||||||||
| Former Chief Executive Officer and Director and Current Head of Licensing & Strategy | 2024 | $ | 558,578 | $ | - | $ | 58,800 | $ | - | $ | - | $ | 617,378 | |||||||||||||||||||
| James Bligh, | 2025 | $ | 528,000 | $ | 345,840 | $ | 577,082 | $ | - | $ | - | $ | - | $ | 1,450,922 | |||||||||||||||||
| Chief Financial Officer | 2024 | $ | 438,060 | - | $ | 105,852 | $ | - | $ | 132,300 | $ | 16,732 | $ | 692,944 | ||||||||||||||||||
| (1) | Salaries converted from British Pounds to US Dollars based on the following exchange rate in effect as of December 31, 2025: 1.35. |
| (2) | Reflects a sign-on bonus of £100,000 for Dr. Tapolczay upon his appointment as Head of Licensing & Strategy. Reflects bonuses of £160,000 and £102,000 awarded to James Bligh for the years ended December 31, 2025 and 2024, respectively; the 2025 bonus was accrued and paid within 2025, while the 2024 bonus was accrued in 2024 and paid during 2025. Reflects a one-time bonus of $0.4 million to Andrew Regan in lieu of a salary. |
| (3) | Reflects the grant date fair value of fully vested stock awards granted to each of Dr. Regan and Mr. Bligh in 2025 computed in accordance with FASB ASC Topic 718. See Note 11 to the consolidated financial statements included in this Annual Report for a discussion of the relevant assumptions used in calculating the grant date fair value pursuant to FASB ASC Topic 718. |
| (4) | Reflects the grant date fair value of stock option awards for the applicable year computed in accordance with FASB ASC Topic 718. See Note 11 to the consolidated financial statements included in this Annual Report for a discussion of the relevant assumptions used in calculating the grant date fair value pursuant to FASB ASC Topic 718. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our named executive officers will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options. |
| (5) | The amounts shown for 2024 represent 401(k) matching contributions of $16,732 for Mr. Bligh and compensation expense of $7.0 million to Andrew Regan in connection with the transfer of CPL to Corvus. |
| (6) | Dr. Regan was appointed as the Chief Executive Officer of the Company on April 15, 2025. |
Compensation Adjustments for 2025
Annual Base Salaries
We provide a base salary to retain and attract key executive talent and to align our compensation with market practices. Base salaries are reviewed and established by the Compensation Committee and the board of directors on a competitive basis each year to align with market levels.
Equity Awards
The Compensation Committee believes that a competitive long-term incentive program is an important component of the compensation of our named executive officers because it: (i) enhances the retentive value of our compensation; (ii) rewards executives for increasing our stock price and developing long-term value; and (iii) provides executives with an opportunity for stock ownership to align their interests with those of our stockholders.
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In September 2025, the board of directors, conducted a review of the long-term incentive opportunities for our named executive officers. Based on a review of each executive’s individual performance, having not provided a cash bonus to Mr. Bligh in two years, having not provided a salary or bonus to Dr. Regan for his services, and the applicable market data, the board of directors approved the following stock grants: (i) Dr. Regan received a fully vested stock award of 5,600 shares, and (ii) Mr. Bligh received a fully vested stock award of 2,400 shares. These grant levels have been adjusted to reflect the 1-for-25 reverse stock split on March 26, 2025.
Employment Agreements
Dr. Tapolczay
On September 22, 2023, we entered into an employment agreement (the “Tapolczay Employment Agreement”) with Dr. Tapolczay, pursuant to which he serves as our Chief Executive Officer of and a member of our board of directors.
Under the Tapolczay Employment Agreement, Dr. Tapolczay was entitled to (i) an annual base salary of $550,000 increased to $566,500 effective November 1, 2024, and (ii) a target annual bonus opportunity equal to 50% of his base salary, payable based on the achievement of performance objectives as determined by our board of directors. In addition, the Tapolczay Employment Agreement provides that Dr. Tapolczay was entitled to receive a sign-on stock option award to purchase 0.40% of the shares of our Common Stock pursuant to the terms of the 2023 Stock Incentive Plan, which shall vest in equal annual installments over four years. The Tapolczay Employment Agreement provided for severance benefits if he incurred certain terminations of employment.
On April 12, 2025, Dr. Tapolczay notified the Board of the Company of his resignation from both the Board and his position as Chief Executive Officer effective immediately. The Tapolczay Employment Agreement was terminated and he was not entitled to receive any severance benefits under that agreement. However, Conduit UK Management LTD, a wholly owned subsidiary of the Company, entered into an Employment Agreement (the “Conduit UK Tapolczay Employment Agreement”) with Dr. Tapolczay pursuant to which Dr. Tapolczay provides strategic advisory services as Head of Licensing & Strategy, reporting to the Chief Executive Officer. In exchange for Dr. Tapolczay’s services, he received a sign-on bonus of £100,000 and an annual base salary of £240,000. Consistent with the terms of the Company’s 2023 Stock Incentive Plan, as amended, and subject to Dr. Tapolczay’s continued service pursuant to his Conduit UK Tapolczay Employment Agreement, his outstanding equity awards he has previously received will remain outstanding and continue to vest based on the vesting dates thereof. Dr. Tapolczay will provide the Company with a release of claims and will be subject to certain non-competition, non-solicitation, non-disparagement, and confidentiality covenants.
James Bligh
On November 15, 2024, Conduit Pharmaceuticals Limited and Conduit UK Management LTD., wholly-owned subsidiaries of the Company, entered into an amended and restated employment agreement (the “Bligh Employment Agreement”) with James Bligh, pursuant to which Mr. Bligh will continue to be employed by Conduit UK Management LTD. and continue to serve as the Interim Chief Financial Officer and Senior Vice President - Strategy of the Company. Under the Bligh Employment Agreement, Mr. Bligh will receive an annual base salary of £400,000 (approximately $500k), and will be entitled to a discretionary cash bonus of up to 40% of his base salary, subject to the achievement of certain milestones that may be established by the Board of Directors or a committee thereof, from time to time. Mr. Bligh is also entitled to reimbursement for reasonable out-of-pocket expenses incurred by him in the performance of his duties, subject to the terms of any expenses policy the Company may have.
The Bligh Employment Agreement requires at least six months’ advanced written notice for Mr. Bligh or Conduit UK Management LTD. to terminate Mr. Bligh’s employment, except in the case of a summary dismissal (as described in the Bligh Employment Agreement). However, Conduit UK Management LTD. may, at its sole discretion and by written notice, terminate Mr. Bligh’s employment immediately and provide compensation to Mr. Bligh for the unexpired portion of such notice period. The Bligh Employment Agreement replaces and supersedes the prior employment agreement between Conduit Pharmaceuticals Limited and Mr. Bligh.
Effective August 4, 2025, James Bligh, co-founder, director and Interim Chief Financial Officer had been appointed as the permanent Chief Financial Officer of the Company. Mr. Bligh will remain a member of the Company’s board of directors.
Andrew Regan
On April 15, 2025, the Company appointed Andrew Regan as Chief Executive Officer, effective immediately (the “Appointment”). As a result of the Appointment, Dr. Regan will serve as Chief Executive Officer of the Company and will continue to serve as a director on the Board. Dr. Regan has not entered into any compensation plans and will continue to waive all salary in connection with his service as Chief Executive Officer, and will be entitled to reimbursement of expenses incurred in connection with his role as Chief Executive Officer, although the Board may assess this determination from time to time, resulting in the grant of one-time bonuses to Dr. Regan.
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Outstanding Equity Awards at 2025 Fiscal Year-End
The following table summarizes all of the outstanding equity-based awards held by our named executive officers as of December 31, 2025, the end of our fiscal year. The option shares reported below have been adjusted to reflect the 1-for-25 reverse stock split on March 26, 2026.
| OPTION AWARDS | |||||||||||||||||
| NAME | OPTION OR STOCK AWARD GRANT DATE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | OPTION
EXERCISE PRICE ($) |
OPTION EXPIRATION DATE | ||||||||||||
| David Tapolczay | 11/18/2024 | (2) | 2 | 1 | $ | 27,600 | 11/17/2034 | ||||||||||
| 12/1/2023 | (1) | 1 | 1 | $ | 1,653,000 | 11/30/2033 | |||||||||||
| James Bligh | 11/18/2024 | (2) | 4 | 2 | $ | 27,600 | 11/17/2034 | ||||||||||
| 12/01/2023 | (1) | 1 | 1 | $ | 1,653,000 | 11/30/2033 | |||||||||||
| Jo Holland | 11/18/2024 |
(2) |
1 | 1 | $ | 27,600 | 11/17/2034 | ||||||||||
12/01/2023 |
(1) |
1 | 1 | $ | 1,653,000 |
11/30/2033 | |||||||||||
| (1) | The stock option vests as to 1/4 of the underlying shares on each of the first four anniversaries of the vesting commencement date |
| (2) | The stock options vests 50% of the grant date and 50% in three equal annual installments thereafter |
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides a summary of the securities authorized for issuance under our equity compensation plans as of December 31, 2025. The table reported below have been adjusted to reflect the 1-for-25 reverse stock split on March 26, 2026.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | ||||||||||||
| 2023 Plan | 242 | $ | 42,480 | 1,212 | ||||||||
| Equity compensation plans not approved by security holders | - | - | - | |||||||||
| Total | 242 | $ | 42,480 | 1,212 | ||||||||
Director Compensation
The following table sets forth the compensation we paid to our non-employee directors during fiscal 2025 (The shares reported below have been adjusted to reflect the 1-for-25 reverse stock split on March 26, 2026):
| Name | Fees earned or paid in cash ($) | Stock awards ($) (1) | Option awards ($) (2) | All Other Compensation | TOTAL ($) | |||||||||||||||
| James Bligh | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Faith L. Charles(3) | $ | 30,000 | $ | 136,738 | $ | - | $ | - | $ | 166,738 | ||||||||||
| Chele Chiavacci Farley | $ | 55,375 | $ | 88,121 | $ | 28,350 | $ | - | $ | 171,846 | ||||||||||
| Freda Lewis-Hall | $ | 61,750 | $ | 100,871 | $ | 28,350 | $ | - | $ | 190,971 | ||||||||||
| Simon Fry | $ | 54,500 | $ | 84,371 | $ | 28,350 | $ | - | $ | 167,221 | ||||||||||
| Andrew Regan | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| (1) | Dr. Lewis-Hall elected to receive $40,250 of her cash fees in the form of fully vested shares, Ms. Chiavacci Farley elected to receive $27,500 of her cash fees in the form of fully vested shares, Mr. Fry elected to receive $23,750 of his cash fees in the form of fully vested shares, and Ms. Charles elected to receive $36,750 of her cash fees in the form of fully vested shares. |
| (2) | Reflects the grant date fair value of fully vested stock awards granted to each of Mr. Fry, Ms. Farley and Ms. Lewis-Hall in 2025 computed in accordance with FASB ASC Topic 718. See Note 11 to the consolidated financial statements included in this Annual Report for a discussion of the relevant assumptions used in calculating the grant date fair value pursuant to FASB ASC Topic 718. |
| (3) | On April 16, 2025, Ms. Charles announced her resignation, due to personal reasons, as a member of the Board of Directors of the Company and from all committees on which she served, effective as of April 16, 2025. Ms. Charles’s resignation was not due to any disagreement with management or the Company’s operations, policies or practices. |
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As of December 31, 2025, our non-employee directors held the following stock options (the option shares reported below have been adjusted to reflect the 1-for-25 reverse stock split on March 26, 2026):
| OPTION AWARDS | |||||||||||||||||
| NAME | OPTION
OR STOCK AWARD GRANT DATE |
NUMBER
OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE |
NUMBER
OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE |
OPTION EXERCISE PRICE ($) |
OPTION EXPIRATION DATE | ||||||||||||
| Faith L. Charles | 12/18/2024 | (1) | 1 | 1 | $ | 21,000 | 12/18/2034 | ||||||||||
| 12/1/2023 | (1) | 1 | 1 | $ | 1,653,000 | 11/30/2033 | |||||||||||
| Chele Chiavacci Farley | 08/05/2025 | (2) | 75 | 1 | $ | 378 | 08/05/2035 | ||||||||||
| 12/18/2024 | (1) | 1 | 1 | $ | 21,000 | 12/18/2034 | |||||||||||
| 12/1/2023 | (1) | 1 | 1 | $ | 1,653,000 | 11/30/2033 | |||||||||||
| Freda Lewis-Hall | 08/05/2025 | (2) | 75 | 1 | $ | 378 | 08/05/2035 | ||||||||||
| 12/18/2024 | (1) | 1 | 1 | $ | 21,000 | 12/18/2034 | |||||||||||
| 12/1/2023 | (1) | 1 | 1 | $ | 1,653,000 | 11/30/2033 | |||||||||||
| Simon Fry | 08/05/2025 | (2) | 75 | 1 | $ | 378 | 08/05/2035 | ||||||||||
| 12/18/2024 | (1) | 1 | 1 | $ | 21,000 | 12/18/2034 | |||||||||||
| (1) | The stock option vests as to 1/3 of the underlying shares on each of the first three anniversaries of the vesting commencement date. |
| (2) | The stock options vests 100% of the underlying shares on the vesting commencement date. |
Compensation Program for the Board of Directors
We adopted a compensation program for our board of directors, which became effective upon completion of the Business Combination, and was amended on September 15, 2025. Under the compensation program, the non-employee directors will receive the following annual cash retainers for their service on the board of directors and its committees:
| ● | $100,000 for each non-employee director; |
| ● | $25,000 for the chair of the Audit Committee and $12,500 for each of the other members of that committee; |
| ● | $25,000 for the chair of the Compensation Committee and $12,500 for each of the other members of that committee; and |
| ● | $25,000 for the chair of the Nominating and Corporate Governance Committee and $12,500 for each of the other members of that committee. |
A non-employee director who is serving on the Board as of the date of any annual meeting after the effective date of the program, and who will continue to serve as a non-employee director immediately following such meeting, will automatically be granted on the date of such annual meeting a stock option to purchase 15,000 shares of our Common Stock, which amount is pro-rated for new directors to reflect their service since the last annual meeting (the “Annual Award”). Each Annual Award will vest and become exercisable on the earlier of (i) the first anniversary of the date of grant, or (ii) the date immediately prior to the next annual meeting of the Company’s stockholders following the date of grant, subject to the non-employee director continuing in service on the Board through such vesting date.
Board members who are also employees of the Company, such as Dr. Regan and Mr. Bligh, are not eligible to participate in the non-employee director compensation program described above and did not receive any compensation for service on the board of directors.
Our 2023 Stock Incentive Plan, as amended, provides that the sum of the grant date fair value of all equity-based awards and the maximum amount of cash that may become payable to any individual for services as a non-employee director during any calendar year may not exceed $750,000, increased to $1,000,000 in the calendar year of a non-employee director’s initial service as a non-employee director. The plan administrator may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the plan administrator may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving non-employee directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth beneficial ownership of the Company’s Common Stock as of April 15, 2026 by:
| ● | each person known to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company; | |
| ● | each of the Company’s executive officers and directors; and | |
| ● | all of the Company’s current executive officers and directors as a group. |
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes securities that the individual or entity has the right to acquire, such as through the exercise of warrants or stock options or the vesting of restricted stock units, within 60 days of April 15, 2026. Shares subject to warrants or options that are currently exercisable or exercisable within 60 days of April 15, 2026 or subject to restricted stock units that vest within 60 days of April 15, 2026 are considered outstanding and beneficially owned by the person holding such warrants, options, or restricted stock units for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
Except as noted by footnote, and subject to community property laws where applicable, based on the information provided to the Company, the persons and entities named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o CDT Equity Inc., 4581 Tamiami Trail North, Suite 200 Naples, Florida 34103.
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The beneficial ownership of our Common Stock is based on 4,858,417 shares of Common Stock issued and outstanding as of April 15, 2026, which number excludes the shares of Common Stock issuable upon exercise of the warrants. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all of the shares shown to be beneficially owned by them. The table reported below have been adjusted to reflect the 1-for-25 reverse stock split effected on March 26, 2026.
| Name and Address of Beneficial Owner(1) | Number of shares of Common Stock |
% of Common Stock* |
||||||
| Directors and executive officers | ||||||||
| James Bligh | 2,405 | (1) | * | |||||
| Chele Chiavacci Farley | 78,302 | (2) | 1.61% | |||||
| Freda Lewis-Hall | 278 | (3) | * | |||||
| Andrew Regan | 162,866 | (4) | 3.35 | % | ||||
| Simon Fry | 260 | (5) | * | |||||
| All directors and executive officers as a group (5 individuals) | 244,111 | 5.02 | % | |||||
| Mark Taylor | 2,068,000 | (6) | 42.57 | % | ||||
| Craig Wigglesworth | 433,543 | (7) | 8.92 | % | ||||
| Primary Development Fund (Cayman) SPC | 416,728 | (8) | 8.58 | % | ||||
| Nirland Limited | 346,834 | (9) | 7.14 | % | ||||
| * | Indicates beneficial ownership of less than 1%. |
| (1) | Consists of (i) 2,400 shares of Common Stock, and (ii) options to purchase 5 shares of Common Stock that are currently exercisable. Excludes 3 unvested options to purchase shares of Common Stock that are not exercisable within 60 days. |
| (2) | Consists of (i) 78,224 shares of Common Stock, (ii) warrants to purchase 1 shares of Common Stock and (iii) options to purchase 77 shares of Common Stock that are currently exercisable. Excludes 2 unvested options to purchase shares of Common Stock that are not exercisable within 60 days. |
| (3) | Consists of shares of Common Stock, of which (i) 192 are held directly by Dr. Lewis-Hall, (ii) 6 were issued to Intelmed LLC, of which Dr. Lewis-Hall is the Managing Director, (iii) 1 share of Common Stock was received by Mr. Emerson Hall, Jr., Dr. Lewis-Hall’s spouse, (iv) 77 are underlying options that are currently exercisable and are held directly by Dr. Lewis-Hall, (v) warrants to purchase 1 share of Common Stock held directly by Dr. Lewis-Hall, and (vi) warrants to purchase 1 share of Common Stock held by Intelmed LLC. By virtue of this relationship with both Intelmed LLC and her spouse, Dr. Lewis-Hall may be deemed to share beneficial ownership of the securities held of record by Intelmed LLC and Mr. Emerson Hall, Jr. Dr. Lewis-Hall disclaims any such beneficial ownership except to the extent of her pecuniary interest therein. Excludes 2 unvested option to purchase shares of Common Stock that are not exercisable within 60 days. The business address of Intelmed LLC is 11421 Golden Eagle Court Naples, Florida 34120. |
| (4) | Consists of (i) 5,600 shares of Common Stock held directly by Dr. Regan, (ii) 156,393 shares of Common Stock held by Corvus Capital Limited (“Corvus”), and (iii) 773 shares of Common Stock held by Manoira Corporation (“Manoira”). Corvus is the owner of 99.0% of the equity interests of Manoira and Algo is a wholly owned subsidiary of Corvus, and, therefore, may also be deemed to beneficially own the shares of Common Stock held of record by Manoira and Algo. Dr. Regan is the sole director of Manoira and the Chief Executive Officer and sole shareholder of Corvus. By virtue of these relationships, Dr. Regan may be deemed to beneficially own the shares of Common Stock held by Manoira, Algo and Corvus. Each of Corvus and Dr. Regan disclaims any such beneficial ownership except to the extent of its or his pecuniary interest therein. Pursuant to a participation and inducement agreement with Nirland Limited, 100 shares of Common Stock held by Corvus may, in certain circumstances, be subject to transfer to Nirland Limited and all such shares of Common Stock are subject to a pledge agreement with respect to such arrangement. The business address of Corvus is Floor 2, Willow House, Cricket Square PO Box 709 Grand Cayman KY1-1107, Cayman Islands. |
| (5) | Consists of 184 shares of Common Stock and options to purchase 76 shares of Common Stock that are currently exercisable. Excludes 2 options to purchase shares of Common Stock that are not exercisable within 60 days. |
| (6) | Consists of shares issued pursuant to the February 2026 Sarborg Transaction (defined below) comprising of (i) 1,469,711 shares of Common Stock held directly by Prospect Capital Securities Limited (“PCSL”); and (ii) 598,289 shares of Common Stock held directly by Prospect Finance Limited (“PFL”). Mr. Taylor disclaims beneficial ownership of such shares of Common Stock held by PCSL and PFL except to the extent of his pecuniary interest. The business address of each of Mark Taylor, PCSL, and PFL is Level 4, 16 Viaduct Harbour Avenue, Auckland, New Zealand. |
| (7) | Consists of shares issued pursuant to the February 2026 Sarborg Transaction (defined below). The address of Craig Wigglesworth is 264 Riddell Road, Glendowie, Auckland 1071, New Zealand. |
| (8) | Consists of shares issued pursuant to the February 2026 Sarborg Transaction (defined below). The address of Primary Development Fund (Cayman) SPC is FOR SUB A/C OF E3 FUND SP, IFINA UK Ltd., Ifina House, 6 the Court, Holywell Business Park, Northfield Road, Southam, Warwickshire, CV47 OFS United Kingdom. |
| (9) | Consists of shares issued pursuant to the February 2026 Sarborg Transaction (defined below). The business address of Nirland Limited is The Old Stables Rue a L’Or, St Peter Port, Guernsey GY1 1QG. |
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Item 13. Certain Relationships and Related Transactions, and Director Independence
In addition to the compensation arrangements with directors and executive officers described under the sections titled “Executive Compensation” and “Management,” the following is a description of each transaction since January 1, 2024 and each currently proposed transaction, in which:
| ● | we have been or are to be a participant; | |
| ● | the amount involved exceeds or will exceed $120,000; and | |
| ● | any of our directors, executive officers, or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest. |
Policies and Procedures for Related Party Transactions
Our board of directors adopted a policy, at the closing of the Business Combination, with respect to the review, approval, and ratification of related party transactions. Under the policy, the audit committee of the board of directors is responsible for reviewing and approving related party transactions. In the course of its review and approval of related party transactions, the audit committee will consider the relevant facts and circumstances to decide whether to approve such transactions. In particular, the policy requires the audit committee to consider, among other factors it deems appropriate:
| ● | whether the transaction was undertaken in the ordinary course of business of the Company; |
| ● | whether the related party transaction was initiated by the Company, a subsidiary, or the related party; | |
| ● | whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party; | |
| ● | the purpose of, and the potential benefits to the Company of, the related party transaction; | |
| ● | if the approximate dollar value of the amount involved in the related party transaction, particularly as it relates to the related party; | |
| ● | the related party’s interest in the related party transaction; | |
| ● | whether the related party transaction would impair the independence of an otherwise independent director; and | |
| ● | any other information regarding the related party transaction or the related party that would be material to investors in light of the circumstances of the particular transaction |
The audit committee may approve the related party transaction only if the audit committee determines in good faith that, under all of the circumstances, the transaction is in the best interests of the Company and its stockholders.
Private Units
Contemporaneously with the closing of the IPO and the exercise of the overallotment option, the Sponsor purchased an aggregate of 2 private units of MURF in a private placement at a price of $3,000,000 per private unit. Each private unit consists of one Private Share and one Private Warrant (the “Private Warrant”). The private units are identical to the units sold in the IPO except that the (a) the placement units and their component securities will not be transferable, assignable or saleable until October 22, 2023 except to permitted transferees and (b) the warrants and rights included as a component of the placement units, so long as they are held by the Sponsor or its permitted transferees, will be entitled to registration rights, respectively. Additionally, the warrants underlying the placement units contain a cashless exercise provision and shall be non-redeemable while held by the initial purchasers thereof or their permitted assignees. The Sponsor had agreed not to transfer, assign or sell any of the private units and underlying securities (except in connection with the same limited exceptions that the Private Shares may be transferred as described above) until after the Business Combination. In connection with completion of the Business Combination, the Sponsor transferred placement units to each of Mrs. Knuettell and Feinberg, former Directors of MURF, and Ms. Chiavacci Farley, former Director of MURF and current Director of CDT.
Sponsor Support Agreement
Concurrently with the execution of the Merger Agreement, the Company entered into a support agreement with the Sponsor pursuant to which the Sponsor agreed to, among other things, vote all of the shares of MURF common stock legally and beneficially owned by it in favor of the Business Combination. On September 20, 2023, the Sponsor voted all of the shares of MURF common stock then legally and beneficially owned by it in favor of the Business Combination.
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PIPE Subscription Agreement
In September 2023, concurrently with the completion of the Business Combination, pursuant to the PIPE Subscription Agreement (the “PIPE Subscription Agreement “) for an aggregate purchase price of $20.0 million, the Company issued an aggregate of 6 shares of the Company’s Common Stock and PIPE Warrants (the “PIPE Warrants”) to purchase 6 shares of Company Common Stock. In conjunction with the execution of the PIPE Subscription Agreement, Corvus Capital and its affiliates entered into a participation and inducement agreement with the Private Placement Investor whereby Corvus agreed to provide certain payments and economic benefits to such investor in the event Corvus Capital sold or pledged in a debt transaction any of the shares it was receiving in the Business Combination. In certain circumstances, such investor may have a right to cause Corvus Capital to transfer certain of its shares to such investor.
The PIPE Subscription Agreement contains registration rights, pursuant to which within 15 business days after the closing of the PIPE Financing, the Company was required to use reasonable best efforts to file with the SEC a registration statement registering the resale of shares of the Company’s common stock. On October 17, 2023, the Company filed a registration statement on Form S-1 (SEC File No. 333-275056) to satisfy that contractual requirement, which registration statement was declared effective by the SEC on December 15, 2023.
The PIPE Warrants are exercisable until September 22, 2028 (five years after the completion of the Business Combination) and have an exercise price of $3,450,000 per share, subject to adjustment as set forth in the PIPE Warrants for stock splits, stock dividends, recapitalizations and similar customary adjustments. The Private Placement Investor may exercise each PIPE Warrant on a cashless basis if the shares underlying the PIPE Warrants are not then registered for resale pursuant to an effective registration statement.
The Company common stock and PIPE Warrants to purchase Company common stock issued pursuant to the PIPE Subscription Agreement were not registered under the Securities Act and were issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
On December 11, 2024, the warrants were modified to reduce the exercise price to $2,694,000 and the warrants were exercised on December 31, 2024.
Consulting Agreement with Jack K. Heilbron
Jack K. Heilbron, who served as the MURF’s Chief Executive Officer, President, and Chairman of the board of directors until September 22, 2023, has entered into a Consulting Agreement (the “Consulting Agreement”) with the Company, which became effective upon the closing of the Business Combination. The Consulting Agreement provides that Mr. Heilbron will provide advisory and consulting services from time to time to the Company until September 22, 2024. Pursuant to the terms of the Consulting Agreement, Mr. Heilbron is entitled to rights as an observer to the Company’s board of directors. Mr. Heilbron is entitled to be paid $25,000 per calendar quarter for his consulting services and is also entitled to a stock option to purchase the number of shares of Common Stock determined by dividing (i) $300,000 by (ii) the per share Black-Scholes valuation as of the grant date, utilizing the same assumptions used in preparation of the financial statements, with the resulting quotient rounded down to the nearest whole share. Mr. Heilbron was awarded stock options to purchase 10 shares of Common Stock on December 1, 2023. As of December 31, 2024, and subsequent agreement between the parties, the Company has paid Mr. Heilbron approximately $25,000 and granted Mr. Heilbron 2 shares of the Company’s common stock
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Transactions with Corvus Capital Limited
Corvus Capital Limited (“Corvus”) is a significant investor in the Company through subscribing to 1 common shares prior to the closing of the Merger on September 22, 2023. Shares held by Corvus on the closing date of the Merger were exchanged for shares of the Company’s Common Stock. The Chief Executive Officer and principal owner of Corvus, Dr. Andrew Regan, is a member of the Board and was appointed as the Chief Executive Officer of the Company on April 15, 2025. Dr. Regan has not entered into any compensation plans and will continue to waive all compensation fees in connection with his service as Chief Executive Officer of the Company and is entitled to reimbursement of expenses incurred in connection with his role as Chief Executive Officer.
For the years ended December 31, 2025 and 2024, the Company incurred director travel expenses payable to Dr. Regan of approximately $0.4 million and $0.4 million, respectively. Director fees were discontinued effective upon the closing of the Merger, and no director’s fees were payable as of December 31, 2025 or 2024.
In September 2023, concurrently with the completion of the Merger, pursuant to the PIPE Subscription Agreement (the “PIPE Subscription Agreement “) for an aggregate purchase price of $20.0 million, the Company issued an aggregate of 6 shares of the Company’s Common Stock and PIPE Warrants (the “PIPE Warrants”) to purchase 6 shares of Company Common Stock. At the time of the execution of the PIPE Subscription Agreement, Corvus and its affiliates entered into a participation and inducement agreement with Nirland whereby Corvus agreed to provide certain payments and economic benefits to Nirland. In certain circumstances, Nirland may have a right to cause Corvus to transfer 100 shares held by Corvus to Nirland.
On December 8, 2025, the Company and Corvus entered into a Sale and Purchase Agreement (the “Agreement”) for the issuance of all of the outstanding shares of Conduit Pharmaceuticals Limited (“CPL”) held of record by the Company (the “CPL Share”), 8,992 shares of Common Stock and 147,432 pre-funded warrants (the “Pre-Funded Warrants”) to purchase shares of Common Stock (the “Pre-Funded Warrant Shares”) collectively to Corvus. The issuance to Corvus was in connection with the sale of CPL, a current subsidiary of the Company, that has been the subject of an ongoing litigation as previously disclosed. The Company sold CPL, including the potential liability associated with the litigation, to Corvus, a wholly-owned subsidiary of the Company’s Chief Executive Officer for a settlement amount of $7,000,000 that was satisfied through the issuance of the Common Stock and Pre-Funded Warrants.
August 2024 Nirland Note
On August 6, 2024, the Company entered into a Senior Secured Promissory Note (the “August 2024 Nirland Note”) with Nirland, a related party of the Company, pursuant to which the Company issued and sold to Nirland the August 2024 Note in the original principal amount of $2,650,000, inclusive of a $500,000 original issuance discount. Refer to Note 9 for additional details.
On October 31, 2024, the Company and Nirland amended the August 2024 Nirland Note, whereby the August 2024 Nirland Note was amended to (i) provide for the conversion of the August 2024 Nirland Note into shares of Common Stock, at Nirland’s discretion, in a multiple of any unpaid amounts, if not otherwise previously paid, pursuant to the conversion rate contained therein, (ii) remove Nirland’s Mandatory Prepayment Right, and (iii) remove Nirland’s right of first refusal to participate in any future equity or debt offerings of the Company. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to shall be determined by dividing (x) such conversion amount by (y) the conversion price. Conversion amount means two and one quarter times the sum of (x) portion of the principal to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued and unpaid interest with respect to such portion of the principal amount, if any. Conversion price means, as of any conversion date or other date of determination, $10, subject to adjustment as provided within the amended agreement.
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October 2024 Nirland Note
On October 28, 2024, the Company issued a promissory note (the “October 2024 Nirland Note”) to Nirland, a related party, in the original principal amount of $600,000 in exchange for funds in such amount. In connection with the October 2024 Nirland Note, the Company paid Nirland a 1% arrangement fee. The October 2024 Nirland Note bears interest at a rate of 12% per annum, is due and payable semi-annually in arrears, and matures on October 31, 2025. Refer to Note 8 for additional details.
In December 2024, the Company reduced the exercise price of the PIPE Warrants held by Nirland to $8.83, after which all such warrants were exercised, resulting in proceeds of approximately $0.2 million. These proceeds were applied to reduce the outstanding balance of the October 2024 Nirland Note.
The Company made additional repayments of $0.1 million, $0.2 million, and $0.1 million on January 14, 2025, January 31, 2025, and February 7, 2025, respectively. As of December 31, 2025, the October 2024 Nirland Note had been fully repaid and no obligations remained outstanding.
For the year ended December 31, 2025, the Company recorded approximately $9,000 of interest expense.
Sarborg Service Agreement
On December 12, 2024, the Company entered into a Services Agreement (the “Sarborg Service Agreement”) with Sarborg Limited (“Sarborg”), a Cayman Islands company and related party of the Company. See Note 16 for further reference to the relationship between the Company and Sarborg. Under the terms of the Sarborg Service Agreement, Sarborg agreed to provide algorithmic and cybernetic technology services to CDT, including the development of decision-support tools and advanced cybernetic systems tailored to enhance CDT’s decision-making processes and maximize the value of its pharmaceutical asset portfolio.
Sarborg agreed to perform the services to CDT comprised of three phases: the Initial Phase (0-24 weeks) focuses on establishing a foundation for collaboration and aligning Sarborg’s services with CDT’s strategic goals; the Development Phase (24-36 weeks) involves building technological infrastructure, including dashboards and predictive models; and the Ongoing Services Phase (36-52 weeks) ensures the sustained functionality and relevance of Sarborg’s deliverables while supporting CDT’s growth through iterative improvements and updates. Sarborg will create specific deliverables, including reports, computer programs, software applications, APIs, mobile applications, source code, written technical specifications and designs, operating and maintenance manuals, and other recorded data and information arising from or relating to the services. Sarborg will provide all necessary resources to perform the services and deliver the deliverables in accordance with the Sarborg Agreement. To date, Sarborg has successfully completed all phases and has achieved all milestones provided for pursuant to the Sarborg Agreement.
During the year ended December 31, 2025, the Company incurred costs under the Sarborg Service agreement, including $1.8 million of milestone payments related to the Services agreement and $0.4 million of ongoing service fees. Of the total costs incurred, $0.4 million was capitalized as a diagnostic asset associated with the dashboard, of which $0.2 million was amortized during the year and recorded within general and administrative expenses in the consolidated statement of operations and comprehensive loss. The remaining $2.2 million, consisting of milestone payments and related services (including signature mapping reports), was expensed as incurred within research and development expenses. As of December 31, 2025, there were no outstanding payables under the Sarborg Service Agreement.
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Sarborg Additional Agreement
Effective March 31, 2025, the Company entered into an additional license and use agreement (the “Sarborg Additional Agreement”) with Sarborg, a related party, covering certain additional deliverables and incorporating a new scope of work focused on analysis of the Company’s acquired AstraZeneca assets. The term of the Sarborg Additional Agreement is for six months and provides for the payment, in aggregate, of $2.0 million, which includes an up-front license fee for the term of such agreement, in cash or stock at the Company’s election at the closing price on the day preceding the effective date of such agreement. On March 31, 2025, the Company prepaid $1.65 million of the Sarborg Additional Agreement through the issuance of 617 fully vested unregistered shares of Common Stock. The Company recorded the shares issued under the Sarborg Additional Agreement at their fair value, as determined by the closing price of the Company’s Common Stock on March 30, 2025, $2,670. Effective June 24, 2025, the term was extended to be 12 months from the effective date of the Sarborg Additional Agreement at no additional cost to the Company. Effective October 1, 2025, the term was extended to be 12 months from the previous extension to extend the term of the license to March 31, 2027 at no additional cost to the Company. The Company recorded the fair value of $1.5 million as prepaid within the consolidated balance sheets. During the year ended December 31, 2025, the Company recorded research and development expense of $1.3 million within the consolidated statements of operations and comprehensive loss related to the Sarborg Additional Agreement. As of December 31, 2025, $0.6 million of the prepaid balance remains within the consolidated balance sheet.
First Addendum to the Sarborg Additional Agreement
Effective July 1, 2025 the Company entered into an Addendum (the “First Addendum”) to the Additional Agreement with Sarborg, a related party. Under the terms of the Addendum, Sarborg will expand the scope of the Additional Agreement to provide external analysis of third-party pharma companies assets suitable for drug re-purposing and evaluate the efficacy of the assets utilizing CDT’s license to Sarborg’s machine learning platform. The scope of work is expected to be completed in 4 weeks, which may be renewed or extended upon the mutual written agreement of the parties. The total consideration for the additional services, payable in cash in two tranches, was $0.3 million. The Company paid $0.3 million during the year ended December 31, 2025 and included the total in the consolidated statement of operations and comprehensive loss.
Second Addendum to the Sarborg Additional Agreement
Effective August 11, 2025 the Company entered into Addendum 2 (the “Second Addendum”) to the Additional Agreement with Sarborg. Under the terms of the Second Addendum, Sarborg expanded the scope of work to integrate a Cryptocurrency AI Agent, developed specifically for identifying, forecasting and recommending digital currencies into CDT Equity’s operations as part of its treasury strategy.
The term of the Second Addendum is a minimum of four (4) months, which may be renewed or extended upon the mutual written agreement of the Company and Sarborg. The initial consideration for the expanded scope of work was $0.2 million, which was paid during the third quarter of 2025 and included in the consolidated statement of operations and comprehensive loss. The Company agreed to pay an additional consideration of up to $0.2 million in cash or shares, at the Company’s sole discretion, at the time the Company invests more than $0.6 million in cryptocurrency as part of its treasury strategy. The Company paid the $0.2 million during the fourth quarter of 2025. The Company paid $0.3 million during the year ended December 31, 2025 and included the total in the consolidated statement of operations and comprehensive loss.
In total, the Company recorded $4.2 million of research and development expense for the year ended December 31, 2025, all of which related to services and costs incurred through the Sarborg Agreement, Sarborg Additional Agreement, First Addendum to the Sarborg Additional Agreement and the Second Addendum to the Sarborg Additional Agreement, collectively.
February 2026 Sarborg Transaction
On February 19, 2026, the Company entered into a Securities Purchase Agreement with all of the stockholders of Sarborg (the “February 2026 Sarborg Transaction”). The investors of Corvus agreed to sell to the Company, and the Company agreed to acquire from the investors, an aggregate of 1,020 shares of Sarborg, representing approximately 20% of the outstanding common stock of Sarborg.
As consideration for the purchase, the Company has agreed to issue to the investors, in the aggregate: (i) 23,920 shares of the Company’s Common Stock, par value $0.0001 per share and (ii) pre-funded warrants (the to purchase up to 4,399,156 shares of Common. In addition, the Company has agreed to pay Sarborg cash consideration of $8 million, with the cash portion of the consideration deferred until such time as the Company raises no less than $20 million through the use of an at-the-market facility program.
Manoira Joint Development Agreement
On June 3, 2025, the Company entered into the Joint Development Agreement with Manoira for a term of one year, which will be automatically renewed for successive one-year terms unless advance termination notice is provided in accordance with the terms of the Joint Development Agreement. Manoira is an entity controlled by Dr. Andrew Regan, of which he is sole director, and of which Chele Chiavacci Farley is a shareholder, and is therefore considered a related party of the Company.
Pursuant to the Joint Development Agreement, CDT granted Manoira a non-exclusive, non-transferable, non-sublicensable, fully paid-up, royalty-free license to the intellectual property rights related to the CDT Assets. Manoira will evaluate the CDT Assets’ applicability in animal health, explore veterinary market opportunities, and provide data from the evaluations to inform CDT’s human clinical programs. The license does not grant Manoira the right to distribute, market, promote or sell the products or services that are related to or incorporate the CDT Assets.
Effective June 3, 2025, in exchange for the approximate $0.5 million of consideration to be paid by CDT under the Joint Development Agreement, CDT issued to Manoira 774 shares of its Common Stock, (the “Consideration Shares”) valued at the closing price of the Common Stock immediately preceding execution of the Joint Development Agreement. The Company recorded the shares issued under the Joint Development Agreement at their fair value, as determined by the closing price of the Company’s Common Stock on June 3, 2025, $646. The Company recorded the fair value of $0.4 million as prepaid within the consolidated balance sheets. During the year ended December 31, 2025, the Company recorded $0.1 million amortization expense for research and development activities provided to date.
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Directors and Officers
Certain of the individuals that serve as members of our board of directors since completion of the Business Combination have relationships with MURF, Old Conduit, and/or one of their respective stockholders. Dr. Freda Lewis-Hall, the Chairperson of our board of directors, was an indirect shareholder of Old Conduit and indirectly received 80 shares of our Common Stock upon completion of the Business Combination. Dr. Andrew Regan, our Chief Executive Officer, is a director of Old Conduit and received 1 shares of our Common Stock upon completion of the Business Combination. James Bligh, a member of our board of directors and interim chief financial officer, was an employee of Old Conduit and currently serves as a member of its board of directors.
On April 22, 2024, the Company issued in a private placement common stock purchase warrants (the “April Warrants”) to third parties, including certain directors, to purchase up to an aggregate of 3 shares of the Company’s common stock, in exchange for entering into a lock-up with respect to the shares of common stock held by such holder and for such directors, $37,500 per warrant. The April Warrants are not exercisable until one year after their date of issuance. Each April Warrant is exercisable into one share of the Company’s common stock at a price per share of $936,000 (as adjusted from time to time in accordance with the terms thereof) for a two-year period after the date of exercisability. There is no established public trading market for the April Warrants. The issuance of the April Warrants were made in reliance on the exemption from registration provided by Section 4(a)(3) of the Securities Act, and/or Regulation D promulgated thereunder.
Item 14. Principal Accountant Fees and Services
The following is a summary of fees paid or to be paid to Marcum LLP, or Marcum, and CBIZ CPAs P.C., or CBIZ (which previously acquired Marcum on November 1, 2024), for services rendered.
Audit Fees. Audit fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q, and for services that are normally provided in connection with statutory or regulatory filings or engagements. The aggregate fees billed by CBIZ for professional services rendered for the year ended December 31, 2025 totaled approximately $495,000. The aggregate fees billed by Marcum for professional services rendered for the year ended December 31, 2025 totaled approximately $51,500. The aggregate fees billed by Marcum for professional services rendered for the year ended December 31, 2024 totaled approximately $460,415.
Tax Fees. Tax fees consists of fees billed for tax compliance, tax planning and tax advice. We did not pay CBIZ any tax fees for the year ended December 31, 2025. We paid Marcum tax fees for the year ended December 31, 2024 totaling approximately $55,748.
All Other Fees. We did not pay CBIZ or Marcum for other services for the years ended December 31, 2025 or December 31, 2024.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
| 80 |
PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of this annual report:
| 1. | Financial Statements: (see “Financial Statements and Supplementary Data” at Item 8 and incorporated herein by reference). |
| 2. | Financial Statement Schedule: (Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto). |
| 3. | Exhibits: The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Annual Report on Form 10-K. |
EXHIBIT INDEX
| Exhibit No. | Description | |
| 2.1 | Agreement and Plan of Merger Agreement dated as of November 8, 2022, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Annex A-1 to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). | |
| 2.2 | Amendment to Agreement and Plan of Merger dated as of January 27, 2023, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Annex A-2 to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). | |
| 2.3 | Second Amendment to Agreement and Plan of Merger dated as of May 11, 2023, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Annex A-3 to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). | |
| 3.1 | Second Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on September 29, 2023, and incorporated herein by reference). | |
| 3.2 | Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on September 29, 2023, and incorporated herein by reference). | |
| 3.3 | Amendment No.1 to the Amended and Restated Bylaws (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 19, 2024, and incorporated herein by reference) | |
| 3.4 | Certificate of Amendment filed with the Delaware Secretary of State on January 22, 2025 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 23, 2025, and incorporated herein by reference). | |
| 3.5 | Certificate of Amendment filed with the Delaware Secretary of State on August 8, 2025 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 8, 2025, and incorporated herein by reference). | |
| 3.6 | Second Amended and Restated Bylaws of the Company, effective August 5, 2025 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 8, 2025, and incorporated herein by reference). | |
| 3.7 | Certificate of Amendment filed with the Delaware Secretary of State on October 8, 2025 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 9, 2025, and incorporated herein by reference). | |
| 3.8 | Certificate of Amendment filed with the Delaware Secretary of State on March 24, 2026 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 25, 2026, and incorporated herein by reference). | |
| 4.1 | Description of Registered Securities. | |
| 4.2 | Form of Senior Secured Promissory Note (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on August 7, 2024, and incorporated herein by reference). | |
| 4.4 | Form of Warrant (Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on November 1, 2024, and incorporated herein by reference). | |
| 4.5 | Nirland Note (Filed as Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on November 1, 2024, and incorporated herein by reference). | |
| 4.6 | Amendment to the Senior Secured Promissory Note and Security Agreement, dated October 31, 2024, between Nirland Limited and CDT Equity Inc. (filed as Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed on November 1, 2024, and incorporated herein by reference). |
| 81 |
| 4.7 | Convertible Promissory Note, dated November 25, 2024, between CDT Equity Inc. and A.G.P./Alliance Global Partners (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on November 25, 2024, and incorporated herein by reference). | |
| 4.8 | Second Amendment to the Senior Secured Promissory Note, dated November 22, 2024, between Conduit Pharmaceuticals Inc. and Nirland Limited (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on November 25, 2024, and incorporated herein by reference). | |
| 4.9 | Pre-Funded Warrant entered into by and between the Company and Corvus on December 8, 2025 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 12, 2025, and incorporated herein by reference). | |
| 4.10 | Form of Pre-Funded Warrant, dated February 19, 2026 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 24, 2026, and incorporated herein by reference). | |
| 4.11 | Form of Senior Secured Convertible Promissory Note, by and between the Company and the Purchaser, dated March 3, 2026 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 9, 2026, and incorporated herein by reference). | |
| 10.1 | Letter Agreement, dated February 2, 2022, among Murphy Canyon Acquisition Corp., Murphy Canyon Acquisition Sponsor, LLC, and each of the executive officers and directors of Murphy Canyon Acquisition Corp. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 8, 2022, and incorporated herein by reference). | |
| 10.2 | Underwriting Agreement (filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed February 8, 2022, and incorporated herein by reference). | |
| 10.3 | Promissory Note, dated November 4, 2021, issued to Murphy Canyon Acquisition Sponsor, LLC, by Murphy Canyon Acquisition Corp. (filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-262036) filed on January 6, 2022, and incorporated herein by reference). | |
| 10.4 | Investment Management Trust Agreement, dated February 2, 2022, between Murphy Canyon Acquisition Corp. and Wilmington Trust Company (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 2, 2022, and incorporated herein by reference). | |
| 10.5 | Registration Rights Agreement, dated February 2, 2022, among Murphy Canyon Acquisition Corp. and certain securityholders (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on February 2, 2022, and incorporated herein by reference) |
| 10.6 | Securities Subscription Agreement, dated November 4, 2021, between Murphy Canyon Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-262036) filed on January 6, 2022, and incorporated herein by reference). | |
| 10.7 | Placement Unit Purchase Agreement, dated February 2, 2022, between Murphy Canyon Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on February 8, 2022, and incorporated herein by reference). | |
| 10.8 | Form of CDT Equity Inc. Indemnity Agreement (filed as Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed on September 29, 2023, and incorporated herein by reference). | |
| 10.9 | Administrative Support Agreement, dated February 2, 2022, by and between Murphy Canyon Acquisition Corp. and Murphy Canyon Management Group, Inc. (filed as Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on February 8, 2022, and incorporated herein by reference). | |
| 10.10 | Form of Lock-Up Agreement (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference). | |
| 10.11 | Sponsor Support Agreement, dated as of November 8, 2022, by and among Murphy Canyon Acquisition Corp. and each of the Persons set forth on Schedule I attached thereto (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference). | |
| 10.12 | Shareholder Support Agreement dated as of November 8, 2022, by and among Murphy Canyon Acquisition Corp., Conduit Pharmaceuticals Limited and each of the Persons set forth on Schedule I attached thereto (filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed November 14, 2022, and incorporated herein by reference). | |
| 10.13 | Form of Amended and Restated Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 30, 2023, and incorporated herein by reference). |
| 82 |
| 10.14 | Form of Note, issued March 7, 2023, by and between Murphy Canyon Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 7, 2023, and incorporated herein by reference). | |
| 10.15 | Form of Subscription Agreement between Murphy Canyon Acquisition Corp. and the investor named therein (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 13, 2023, and incorporated herein by reference). | |
| 10.16 | Form of PIPE Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on September 13, 2023, and incorporated herein by reference). |
| 10.17# | CDT Equity Inc. 2023 Stock Incentive Plan (filed as Annex C to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). | |
| 10.18# | Form of Stock Option Agreement under CDT Equity Inc. 2023 Stock Incentive Plan (filed as Exhibit 10.17 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). | |
| 10.19# | Form of Employment Agreement with David Tapolczay (filed as Exhibit 10.17 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 28, 2023, and incorporated herein by reference). | |
| 10.22+ | AZD1656 Project Funding Agreement For Use In Renal Transplant between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.21 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). | |
| 10.23+ | AZD1656 Project Funding Agreement For Use In Preterm Labor between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.22 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). | |
| 10.24+ | AZD1656 Project Funding Agreement For Use In Hashimoto’s Thyroiditis between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.23 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). | |
| 10.25+ | AZD1656 Project Funding Agreement For Use In Uveitis between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.24 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). |
| 10.26+ | AZD5904 Project Funding Agreement between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.25 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). | |
| 10.27# | Consulting Agreement between with Jack Heilbron and Murphy Canyon Acquisition Corp. (filed as Exhibit 10.24 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 11, 2023, and incorporated herein by reference). |
| 83 |
| 10.28 | Separation Agreement, dated May 12, 2024, between Mr. Sragovicz and CDT Equity Inc. (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 14, 2024, and incorporated herein by reference). | |
| 10.29 | Security Agreement, dated August 6, 2024, between Nirland Limited and CDT Equity Inc. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 7, 2024, and incorporated herein by reference). | |
| 10.30 | Convertible Promissory Note between Conduit Pharmaceuticals Limited and Vrezh and Sharon Lee Isayan, dated March 20, 2023 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 15, 2024, and incorporated herein by reference). | |
| 10.31 | Bridge Loan Agreement, dated October 29, 2024, between A.G.P./Alliance Global Partners and CDT Equity (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 1, 2024, and incorporated herein by reference). | |
| 10.32# | Employment Agreement, dated November 15, 2024, between James Bligh, Conduit Pharmaceuticals Limited and Conduit UK Management LTD. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 19, 2024, and incorporated herein by reference). | |
| 10.33 | Services Agreement dated December 12, 2024, between CDT Equity Inc. and SARBORG Limited. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 17, 2024, and incorporated herein by reference). | |
| 10.34 | Additional Agreement, dated March 31, 2025, between Sarborg Limited and CDT Equity Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 16, 2025, and incorporated herein by reference). | |
| 10.35 | Joint Development Agreement, dated June 3, 2025 by and between CDT Equity Inc. and Manoira Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 9, 2025, and incorporated herein by reference). | |
| 10.36 | Consulting Agreement, dated June 27, 2025, by and between the Company and Harold Eytan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 8, 2025, and incorporated herein by reference). | |
| 10.37 | Amended and Restated 2023 Stock Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 9, 2025, and incorporated herein by reference). |
| 10.38 | Sale and Purchase Agreement, dated December 8, 2025, by and between the Company and Corvus (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 12, 2025, and incorporated herein by reference). | |
| 10.39 | Consulting Agreement, dated December 28, 2025, between CDT Equity, Inc. and Thesprogen, PC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 2, 2026 and incorporated herein by reference). | |
| 10.40 | Consulting Agreement, dated December 29, 2025, between CDT Equity, Inc. and NJS Foresight Bio-Advisory, LLC (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 2, 2026, and incorporated herein by reference). | |
| 10.41 | Equity Purchase Agreement, dated January 16, 2026, by and among the Company and the Purchaser (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 22, 2026, and incorporated herein by reference). | |
| 10.42 | Registration Rights Agreement, dated January 16, 2026, by and among the Company and the Purchase (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 22, 2026, and incorporated herein by reference). | |
| 10.43 | Form of Securities Purchase Agreement, dated February 19, 2026 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 24, 2026, and incorporated herein by reference). | |
| 10.44 | Addendum No. 1, dated February 23, 2026, to the Consulting Agreement, dated December 29, 2025 by and between the Company and NJS Foresight Bio-Advisory, LLC (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 24, 2026, and incorporated herein by reference). | |
| 10.45 | Addendum No. 1, dated February 23, 2026, to the Consulting Agreement, dated December 29, 2025 by and between the Company and Thesprogen, PC (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 24, 2026, and incorporated herein by reference). |
| 84 |
| 10.46 | Form of Amendment to Equity Purchase Agreement, dated March 3, 2026 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 9, 2026, and incorporated herein by reference) | |
| 10.47 | Note Purchase Agreement, by and between the Company and Purchaser, dated March 3, 2026 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 9, 2026, and incorporated herein by reference) | |
| 10.48 | Security Agreement, by and between the Company and the Purchaser, dated March 3, 2026 (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 9, 2026, and incorporated herein by reference) | |
| 10.49#* | Form of Non-Employee Director Compensation Program, dated September 1, 2025 | |
| 10.50 | Guaranty, by and between the Company and the Purchaser, dated March 3, 2026 (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on March 9, 2026, and incorporated herein by reference) | |
| 19.1 | CDT Equity Inc. Insider Trading Policy (filed as Exhibit 19.1 to the Company’s Annual report on Form 10-K filed on March 28, 2025, and incorporated herein by reference). | |
| 21.1 | Subsidiaries of Conduit Pharmaceuticals Limited (filed as Exhibit 21.1 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 28, 2023, and incorporated herein by reference). | |
| 23.1* | Consent of Marcum LLP, independent public accounting firm of CDT Equity Inc. | |
| 23.2* | Consent of CBIZ CPAs P.C., independent public accounting firm of CDT Equity Inc. | |
| 24.1 | Power of Attorney (reference is made to the signature page hereto). | |
| 31.1* | Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1§ | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2§ | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 97.1 | CDT Equity Inc. Compensation Recovery Policy (filed as Exhibit 97.1 to the Registrant’s Annual Report filed on April 16, 2024, and incorporated herein by reference). | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Filed herewith.
# Management contract or compensatory plan or arrangement.
+ Certain portions of this Exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K. The Registrant agrees to furnish supplementally an unredacted copy of this Exhibit to the SEC upon its request.
§ In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto is deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
Item 16. Form 10–K Summary
None.
| 85 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CDT EQUITY INC. | ||
| Date: April 15, 2026 | By: | /s/ Andrew Regan |
| Name: | Andrew Regan | |
| Title: | Chief Executive Officer | |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrew Regan and James Bligh, and each of them, as his or her attorneys-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, and each of them, or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Andrew Regan | Chief Executive Officer and Director | April 15, 2026 | ||
| Andrew Regan | (Principal Executive Officer) | |||
| /s/ James Bligh | Chief Financial Officer and Director | April 15, 2026 | ||
| Jamie Bligh | (Principal Financial Officer and Principal Accounting Officer) | |||
| /s/ Freda Lewis-Hall | Director and Chairperson of the Board of Directors | April 15, 2026 | ||
| Freda Lewis-Hall | ||||
| /s/ Chele Chiavacci Farley | Director | April 15, 2026 | ||
| Chele Chiavacci Farley | ||||
| /s/ Simon Fry | Director | April 15, 2026 | ||
| Simon Fry |
| 86 |
CDT EQUITY INC.
INDEX TO FINANCIAL STATEMENTS
| Page | ||
| Audited Financial Statements of Conduit Pharmaceuticals Inc.: | ||
| Report of Independent Registered Public Accounting Firm (PCAOB No. |
F-2 | |
| Report of Independent Registered Public Accounting Firm
(PCAOB No. |
F-3 | |
| Consolidated Balance Sheets as of December 31, 2025 and 2024 | F-4 | |
| Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 | F-5 | |
| Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2025 and 2024 | F-6 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 | F-7 | |
| Notes to Consolidated Financial Statements | F-8 |
| F-1 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
CDT Equity Inc.
Opinion on the Financial Statements
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
CBIZ CPAs P.C.
We have served as the Company’s auditor since 2022 (such date takes into account the acquisition of the attest business of Marcum llp by CBIZ CPAs P.C. effective November 1, 2024).
April 15, 2026
| F-2 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
CDT Equity Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of CDT Equity Inc. (f/k/a Conduit Pharmaceuticals Inc.) (the “Company”) as of December 31, 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
Marcum LLP
We served as the Company’s auditor from 2022 to 2025.
March 28, 2025, except for the effects of the reverse stock splits described in Note 1 and adoption of ASU 2023-09, Income Taxes described in Note 3 to the financial statements, as to which the date is April 15, 2026
| F-3 |
CDT EQUITY INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid R&D services- related party (see Note 10 and Note 16) | ||||||||
| Prepaid R&D services | - | |||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Equipment and clinical assets, net | ||||||||
| Prepaid expenses and other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Accrued litigation liability | - | |||||||
| Operating lease liability, current portion | ||||||||
| Convertible promissory note payable | - | |||||||
| Convertible promissory notes payable at fair value | ||||||||
| Convertible promissory notes payable at fair value – related parties | - | |||||||
| Convertible promissory notes payable at fair value | - | |||||||
| Notes payable | - | |||||||
| Notes payable – related parties | - | |||||||
| Notes payable | - | |||||||
| Total current liabilities | ||||||||
| Operating lease liability, non-current portion | - | |||||||
| Derivative warrant liability | - | |||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 15) | - | - | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Common stock, par value
$ | - | - | ||||||
| Preferred stock, par value
$ | - | - | ||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
CDT EQUITY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share amounts and per share data)
| 2025 | 2024 | |||||||
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Total operating costs and expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expenses): | ||||||||
| Other expense, net | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted weighted-average common shares outstanding | ||||||||
| Comprehensive loss: | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
CDT EQUITY INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(in thousands, except share amounts)
| Shares | Amount | capital | deficit | income | deficit | |||||||||||||||||||
| Common stock | Additional paid-in | Accumulated | Accumulated other comprehensive | Total stockholders’ | ||||||||||||||||||||
| Shares | Amount | capital | deficit | income | deficit | |||||||||||||||||||
| Balance at January 1, 2024 | $ | - | - | $ | $ | ( | ) | $ | | $ | ( | ) | ||||||||||||
| Correction of immaterial error related to franchise tax expense | - | - | - | - | ||||||||||||||||||||
| Issuance of Common Stock for services | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock upon vesting of restricted stock units | - | - | - | - | - | |||||||||||||||||||
| Issuance of Common Stock for note payable | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock for licensing right | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock under the ATM Program, net of issuance cost | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock in Exchange for Debt Modification | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock upon Exercise of Conversion Option | - | - | - | |||||||||||||||||||||
| Issuance of Warrants | - | - | - | - | ||||||||||||||||||||
| Issuance of Common Stock Upon Exercise of Warrants | - | - | - | |||||||||||||||||||||
| Stock-based compensation | - | - | - | |||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Balance at December 31, 2024 | $ | - | - | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||
| Shares | Amount | Stock | capital | deficit | income | deficit | ||||||||||||||||||||||
| Common stock | Treasury | Additional paid-in | Accumulated | Accumulated other comprehensive | Total stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Stock | capital | deficit | income | deficit | ||||||||||||||||||||||
| Balance at January 1, 2025 | $ | - | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Issuance of Common Stock for services | - | - | - | - | ||||||||||||||||||||||||
| Issuance of common stock for services - related party | - | - | - | - | ||||||||||||||||||||||||
| Issuance of common stock for services | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock upon vesting of restricted stock units | - | - | - | - | - | - | ||||||||||||||||||||||
| Issuance of Common Stock under the ATM Program, net of issuance cost | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock upon Exercise of Conversion Option | - | - | - | - | ||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||||||
| Share repurchases | - | - | ( | ) | - | - | - | ( | ) | |||||||||||||||||||
| Share cancellation | ( | ) | - | ( | ) | - | - | - | ||||||||||||||||||||
| Issuance of common stock upon the sale of subsidiary | - | - | - | - | ||||||||||||||||||||||||
| Issuance of warrants upon the sale of subsidiary | - | - | - | - | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Balance at December 31, 2025 | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
CDT EQUITY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| 2025 | 2024 | |||||||
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Compensation expense recognized for the issuance of shares and warrants in connection with the sale of a previously controlled subsidiary | - | |||||||
| Gain on debt extinguishment, net | ( | ) | - | |||||
| Loss on debt extinguishment, net | - | |||||||
| Realized gain on short-term investments | - | ( | ) | |||||
| Loss on disposal of crypto holdings | - | |||||||
| Gain on waiver of accrued interest | ( | ) | - | |||||
| Unrealized foreign exchange gain / loss | ( | ) | ||||||
| Loss (gain) on change in fair value of convertible notes payable | ( | ) | ||||||
| Gain on change in fair value of warrants | ( | ) | ( | ) | ||||
| Loss on issuance of warrants | - | |||||||
| Non-cash lease expense | ||||||||
| Stock-based compensation expense | ||||||||
| Issuance of common stock for licensing right | - | |||||||
| Non-cash interest expense | ||||||||
| Depreciation expense | ||||||||
| Amortization of prepaid directors and officers insurance | ||||||||
| Amortization expense | ||||||||
Issuance of common stock for services | - | |||||||
Issuance of common stock for services - related party | - | |||||||
| Amortization of debt discount | - | |||||||
| Gain (loss) on issuance of common stock for services | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Accrued litigation liability | - | |||||||
| Lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of digital assets | ( | ) | - | |||||
| Proceeds from disposal of digital assets | - | |||||||
| Purchase of equipment and clinical assets | ( | ) | ( | ) | ||||
| Purchases of short-term investments | - | ( | ) | |||||
| Proceeds from the sale of short-term investments | - | |||||||
| Net cash flows used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the issuance of notes payable – related parties | - | |||||||
| Proceeds from issuance of common shares related to ATM program | ||||||||
| Exercise of warrants | - | |||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Proceeds from issuance of warrants | - | |||||||
| Repayment of notes payable - related parties | ( | ) | - | |||||
| Repayment of convertible notes payable - related parties | ( | ) | - | |||||
| Repayment of convertible notes payable | ( | ) | - | |||||
| Purchases of treasury stock | ( | ) | - | |||||
| Net cash flows provided by financing activities | ||||||||
| Net change in cash and cash equivalents before effect of exchange rate changes | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net change in cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of year | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Right of Use Asset obtained in exchange for Operating Lease Liabilities | $ | - | $ | |||||
| Correction of immaterial error related to franchise tax expense | $ | - | $ | |||||
| Issuance of Common Stock upon exercise of conversion option | $ | $ | ||||||
| Issuance of Common Stock in exchange for debt extension | $ | - | $ | |||||
| Shares cancelled | $ | ( | ) | $ | - | |||
| Conversion of deferred commission payable to convertible promissory note | $ | - | $ | |||||
| Supplemental Cash Disclosures | ||||||||
| Cash paid for interest | $ | - | $ | |||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-7 |
CDT EQUITY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of the Business
CDT Equity Inc., formerly Conduit Pharmaceuticals Inc., a Delaware corporation (“CDT”, “CDT Equity” or the “Company”), is a data-driven pharmaceutical development and digital asset treasury management company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships. The Company has evolved into a broader, more agile platform that leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development of novel treatments.
The Company’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by larger pharmaceutical companies with strong, supporting Phase I safety data. Through advanced co-crystallization and solid-form technologies developed at our Cambridge facilities, the Company improves drug properties and extends patent life by up to 20 years. In partnership with Sarborg Limited, the Company also applies AI-powered disease mapping to rapidly identify new therapeutic applications for existing compounds.
The Company’s pipeline includes candidates that target autoimmune disorders, as well as idiopathic male infertility, oncology, dermatology, and animal health. Ongoing in vitro and in vivo studies, guided by AI insights, are designed to support licensing and commercialization partnerships. The Company will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, by entering into agreements with third-parties to pursue further development, FDA approval, commercialization and marketing of the Company’s assets.
Operating with a lean, asset-agnostic model, CDT Equity prioritizes speed, adaptability, and capital efficiency. We avoid the cost burden of late-stage clinical trials, focusing instead on high-leverage development strategies.
Effective August 5, 2025, the Company changed its name from Conduit Pharmaceuticals Inc. to CDT Equity Inc. Our change to CDT Equity Inc. reflects the evolution of our strategy as a data-driven biotech development company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships.
On May 23, 2025, the Company’s Common Stock commenced trading, as further described herein, on The Nasdaq Capital Market under the symbol “CDT”.
Reverse Stock Splits
During
the year ended December 31, 2025, the Company completed three reverse stock splits: a
All historical share and per-share amounts reflected throughout the accompanying consolidated financial statements and other financial information in this Annual Report on Form 10-K have been retroactively adjusted to reflect the January Reverse Stock Split, May Reverse Stock Split, October Reverse Stock Split and March 2026 Reverse Stock Split as if the Reverse Stock Splits occurred as of the earliest period presented.
| F-8 |
2. Liquidity and Going Concern
In
accordance with ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate,
that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial
statements are issued. Since its inception, the Company has generated significant losses and as of December 31, 2025, the Company had
an accumulated deficit of $
The Company’s expectation is to generate operating losses and negative operating cash flows in the future and will need additional funding to support its current business plan in addition to re-stickering the funds available from the at the market offering program (the “Sales Agreement”). The Company currently has no remaining funds available from the Sales Agreement as of the financial statement release date. Management’s plans to alleviate the conditions that raise substantial doubt through the pursuit of additional cash resources through public or private equity or debt financings. However, there is no assurance that such funding will be available when needed or on acceptable terms. If additional funding is not available when required, the Company would need to delay or curtail its operations and its research and development activities until such funding is received, all of which could have a material adverse effect on the Company and its financial condition.
These financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
3. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to U.S. GAAP issued by the FASB in these notes to the accompanying consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”).
| F-9 |
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Conduit UK Management Ltd. (United Kingdom) and Conduit Pharmaceuticals, Ltd. (Cayman Islands). The operating results of Conduit Pharmaceuticals, Ltd. are included in the Company’s consolidated financial statements for the full period presented. As used herein, references to the “Company” include Conduit Pharmaceuticals, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Reclassification
In
order to conform with current period presentation, $
Other Risks and Uncertainties
The Company is subject to risks common to companies in the development stage and pharmaceutical industry including, but not limited to, uncertainties related to pre-clinical and clinical outcomes competitor products, regulatory approvals, dependence on key products, dependence on key suppliers and protection of intellectual property rights (see Note 15 for details on a claim against our AZD 1656 co-crystal patent). Clinical assets currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance and reporting capabilities. Even if the Company’s efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from royalties or product sales.
The Company licenses clinical assets from AstraZeneca. If there is a breach or other termination of such agreements, there could be a material adverse effect on the Company’s business, financial condition, operating results, and prospects. See Note 10 for further discussion of the agreement with AstraZeneca.
| F-10 |
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements as we l as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends, and the assessment of the probable future outcome. Actual results could differ materially from such estimates. Estimates and assumptions are reviewed periodically by management and changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. The effects of changes are reflected in the financial statements in the period that they are determined. Our significant accounting policies that involve significant judgment and estimates include accounting for the fair value of convertible notes payable, stock based compensation, contingencies and going concern.
Cash and Cash Equivalents
Cash
and cash equivalents are primarily maintained with major financial institutions in the United States, United Kingdom, and Switzerland.
The Company considers cash equivalents to be short-term, highly liquid investments that (a) are readily convertible into known amounts
of cash, (b) are traded and held for cash management purposes, and (c) have original maturities of three months or less at the time of
purchase. The Switzerland bank accounts holding cash balances are uninsured, and the UK bank account, with a balance at December 31,
2025 of approximately £
The
Company had $
| F-11 |
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company used various valuation approaches. A fair value hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Unobservable inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels, based on the inputs, as follows:
| ● | Level 1—Valuations based on quoted prices for identical instruments in active markets. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. | |
| ● | Level 2— Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose inputs or significant value drivers are observable or can be corroborated by observable market data. | |
| ● | Level 3—Valuations based on inputs that are unobservable. These valuations require significant judgment. |
The Company’s Level 1 assets consist of cash and cash equivalents in the accompanying consolidated balance sheets and the carrying value of accrued expenses and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.
As of December 31, 2025 and December 31, 2024, the Company has two financial liabilities, warrant liabilities for which the fair value is determined based on Level 2 and Level 3 inputs, and convertible debt carried at fair value for which the fair value is determined based on Level 3 input. The Level 2 inputs are valued based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar instruments in active markets. The Level 3 inputs as such inputs are based on unobservable inputs and require significant judgement.
Fair Value Option
The Company has elected the fair value measurement option for convertible debt with embedded derivatives that would otherwise require bifurcation and has recorded the entire hybrid financial instrument at fair value under the guidance in ASC 825, Financial Instruments. As a result, the August 2024 Nirland Note was recorded at fair value subsequent to the Second Amendment and the A.G.P. Convertible Note was recorded at fair value upon issuance. The notes will subsequently be remeasured at fair value each reporting date until settled or converted. The Company reports interest expense, including accrued interest, related to the convertible debt under the fair value option, separately from within the change in fair value of the convertible debt in the accompanying consolidated statement of operations and comprehensive loss. Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive loss. During the year ended December 31, 2025, the Company did not record any changes in fair value related to instrument-specific credit risk.
Equipment and Clinical Assets
Equipment and clinical assets are initially recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. As of December 31, 2025, equipment and clinical assets primarily consisted of an acquired clinical asset and leasehold improvements.
| F-12 |
Leases
In accordance with ASC 842, Leases (“ASC 842”), the Company records a right-of-use (ROU) asset and a lease liability on the balance sheet for all leases with terms longer than 12 months and classifies them as either operating or finance leases.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease including whether the contract involves the use of a distinct identified asset, whether the Company obtains the right to substantially all the economic benefit from the use of the asset, and whether the Company has the right to direct the use of the asset. Leases with a term greater than one year are recognized on the balance sheet as ROU assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less under practical expedient in paragraph ASC 842-20-25-2. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component.
Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The implicit rate within our operating leases is generally not determinable and, therefore, the Company uses the incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The determination of the Company’s incremental borrowing rate requires judgment. The Company determines the incremental borrowing rate for each lease using our estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The operating lease ROU asset also includes any lease prepayments, offset by lease incentives.
An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option. An option to terminate is considered unless it is reasonably certain we will not exercise the option.
Research and Development
Research and development expenses consist primarily of costs incurred in connection with the research and development of our clinical assets and programs, see Note 10 for further discussion of research and development expense. CDT holds all licenses to conduct clinical research through a third-party pharmaceutical company. The Company expenses research and development costs and intangible assets acquired that have no alternative future use as incurred. These expenses include:
| ● | expenses incurred under agreements with organizations that support the Company’s drug discovery and development activities; | |
| ● | expenses incurred in connection with the preclinical and clinical development of the Company’s clinical assets and programs, including under agreements with contract research organizations, or CROs; | |
| ● | costs related to contract manufacturing organizations, or CMOs, that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct the Company’s clinical trials, nonclinical studies and other scientific development services; | |
| ● | the costs of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches; | |
| ● | employee-related expenses, including salaries, related benefits and equity-based compensation expense, for employees engaged in research and development functions; | |
| ● | acquisition costs related to the purchase of licensed intellectual property; | |
| ● | costs related to compliance with quality and regulatory requirements; | |
| ● | payments made under third-party licensing agreements; and | |
| ● | direct and allocated costs related to facilities, information technology, personnel and other overhead. |
Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or consumed or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.
| F-13 |
Purchased Research and Development Assets
The Company accounts for its research and development costs in accordance with ASC 730, Research and Development. ASC 730 requires that research and development are generally recognized as an expense as incurred. However, some costs associated with research and development activities that have an alternative future use may be capitalizable. Purchases of assets related to research and development activities are evaluated based on the usefulness to the Company currently and for alternative future uses. Purchased research and development assets with alternative future use are recorded at cost and subsequently amortized using the straight-line method over their estimated useful lives. To date, the Company has one purchased asset, a diagnostic tool used to monitor clinical trials, aggregate data on an ongoing basis and tracking intellectual property patent status. The Company determined that the diagnostic tool has an alternative future use, namely using its predictive modeling capability to track and evaluate delisted patents in the marketplace, potentially facilitating strategic entry into de-prioritized asset markets that might otherwise be overlooked by other market participants. The asset is depreciated on a straight-line basis over its useful life of two years.
Income Taxes
ASC Topic 740, Income Taxes, sets forth standards for financial presentation and disclosure of income tax liabilities and expense. Interest and penalties recognized have been classified in the consolidated statements of operations and comprehensive loss as income taxes. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations and comprehensive loss in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits of which future realization is uncertain.
Net Loss per Share Attributable to Common Stockholders
The Company calculates basic and diluted net loss per share under ASC Topic 260, Earnings Per Share. Basic net loss per share is computed by dividing the net loss by the number of weighted-average common shares outstanding for the period. Diluted net loss is computed by adjusting net loss based on the impact of any dilutive instruments. Diluted net loss per share is computed by dividing the diluted net loss by the number of weighted-average common shares outstanding for the period including the effect, if dilutive, of any instruments that can be settled in common shares. When computing diluted net loss per share, the numerator is adjusted to eliminate the effects that have been recorded in net loss (net of tax, if any) attributable to any liability-classified dilutive instruments.
Warrants
The Company determines the accounting classification of Warrants as either liability or equity by first assessing whether the Warrants meet liability classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). Under ASC 480, a financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares must be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares.
If financial instruments, such as the Warrants, are not required to be classified as liabilities under ASC 480, the Company assesses whether such instruments are indexed to the Company’s own stock under ASC 815-40. In order for an instrument to be considered indexed to an entity’s own stock, its settlement amount must always equal the difference between the following: (a) the fair value of a fixed number of the Company’s equity shares, and (b) a fixed monetary amount or a fixed amount of a debt instrument issued by the Company. The Company determined that the settlement amount of the Equity Classified Warrants would equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument) and must be classified as equity, while the settlement amount of the Liability Classified Warrants would not equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument) and must be classified as a liability.
| F-14 |
The Equity Classified Warrants are recorded in stockholders’ deficit and the Liability Classified Warrants are recorded as liabilities in the Consolidated Balance Sheet. The Liability Classified Warrants are remeasured each period with changes in fair value recorded in the consolidated statements of operations and comprehensive loss.
Stock-based Compensation
The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company then recognizes the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:
| ● | Expected volatility – The Company estimates expected volatility based on the historical and implied volatility of its common stock. The Company considered the standard deviation of daily lognormal returns and applied a downward adjustment to the observed historical volatility based on an analysis incorporating Black-Scholes modeling and market participant assumptions. | |
| ● | Expected term – the Company estimates the expected term using the “simplified” method outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.” | |
| ● | Risk-free interest rate – the Company estimates the risk- free interest rate using the U.S. Treasury Yield curve for periods equal to the expected term of the options in effect at the time of grant. | |
| ● | Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend. |
The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.
Foreign Currency Translation
The Company translated the assets and liabilities of its foreign subsidiary from their respective functional currency, the British pound, to United States dollars at the appropriate spot rates as of the balance sheet date. Income and expenses of operations are translated to United States dollars using weighted average exchange rates during the year. The foreign subsidiaries use the local currency as their functional currency. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated statements of changes in stockholders’ deficit. Non-monetary items in the subsidiaries’ functional currency are re-measured into the reporting currency at the historical exchange rate (i.e., the rate of exchange at the date of the transaction).
| F-15 |
Recently Issued Accounting Pronouncements Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 modifies the reporting requirements for income tax disclosures related to effective tax rates and cash income taxes paid. Pursuant to ASU 2023-09, public business entities are required to disclose certain categories in the income tax rate reconciliation, as well as additional information for reconciling items that meet a specific quantitative threshold. Additionally, ASU 2023-09 requires annual disclosures of income taxes paid for all entities, including the amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdictions. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company retrospectively adopted ASU 2023-09 and all periods presented within the consolidated financial statements will reflect the adoption. The retrospective adoption of ASU 2023-09 resulted in enhanced disclosures in our consolidated financial statements. Refer to Note 12 for further information.
In December 2023, the FASB issued ASU No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements. The Company elected to adopt ASU 2023-08, effective as of July 1, 2025, the first quarter in which the Company held digital assets. Refer to Note 6 for further information.
Recently Issued Accounting Standards Not Yet Adopted
In December 2025, the FASB issued Accounting Standards Update No. 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements (“ASU 2025-11”), to improve the navigability and clarity of interim reporting guidance in the FASB Accounting Standards Codification and clarify when Topic 270 applies. The amendments add a comprehensive list of interim disclosure requirements currently required by GAAP and a new disclosure principle requiring an entity to disclose events since the end of the most recent fiscal year that have a material impact on the entity’s interim financial statements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities and after December 15, 2028 for entities other than public business entities. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting ASU 2025-11 on our interim reporting practices and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU introduces a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under the expedient, entities may assume that the current conditions applied in determining credit loss allowances remain unchanged for the remaining life of those assets. This ASU is required to be adopted on a prospective basis. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those years, with early adoption permitted. The Company adopted this standard effective January 1, 2026 and does not expect the adoption of the ASU 2025-05 to have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statements of operations and comprehensive loss. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statements and disclosures.
| F-16 |
4. Sale of Wholly-Owned Subsidiary
On
December 8, 2025, the Company and Corvus Capital Limited (“Corvus”), entered into a Sale and Purchase Agreement (the
“Agreement”) for the sale of all of the outstanding shares of CPL held of record by the Company (the “CPL
Share”), together with
CPL was subject
to ongoing litigation prior to the sale, for which judgment was rendered on December 16, 2025 in favor of the claimant for $
Total
consideration for the disposition of CPL was $
The Company determined the total consideration for the disposition by performing a broad, mid-point evaluation of the range of damages, should CPL receive an unfavorable judgment, based on the ranges of the Experts’ Evidence at the second valuation date, which was agreed by the parties in evidence and confirmed in the judges’ summing-up. The referenced second valuation date considered a range of damages resulting from the non-payment of the cash advisory fee and non-delivery of carry shares, to include the expected value of the disposal of the shares following the 180-day lock-up period that would have been entered into at the time of the business combination.
Following the sale of CPL on December 8, 2025, the Company has determined that, while the transaction resulted in the legal disposition of CPL and its net liabilities, from an accounting perspective the criteria for isolation and deconsolidation were not met as of December 31, 2025. Accordingly, CPL remains consolidated within the consolidated financial statements of the Company at December 31, 2025.
The
Company recognized the compensation expense of $
Through the filing of the consolidated financial statements, the judgment has not been settled by CPL and, therefore, it is currently not in compliance with the judgment’s stated settlement date of January 13, 2026. CPL’s subsequent appeal of the judgment was later dismissed. Corvus, as the sole shareholder in CPL, maintains the decision making process in the handling of the judgment following the sale of CPL. Strand has not attempted to enforce the judgment against CPL, but during the first quarter of 2026, the Company received correspondence from Strand’s counsel discussing the potential of Strand seeking to enforce the judgment against the Company directly. To date, no legal action against the Company has commenced and the Company will continue to vigorously defend its position as it relates to the litigation with Strand.
See Note 15 and Note 18 for further discussion of the litigation and Pre-Funded Warrants.
5. Fair Value
During the period ended December 31, 2025, there were no transfers between Level 1 and Level 2, nor into or out of Level 3. The following table presents as of December 31, 2025 the Company’s assets and liabilities subject to measurement at fair value on a recurring basis (in thousands):
Schedule of Assets Subject to Measurement at Fair Value on Recurring Basis
| Fair Value Measurements as of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | - | $ | - | $ | ||||||||||
| Total Assets | $ | $ | - | $ | - | $ | ||||||||||
| Liabilities: | ||||||||||||||||
| Convertible notes payable at fair value | $ | - | $ | - | $ | $ | ||||||||||
| Total Liabilities | $ | - | $ | - | $ | $ | ||||||||||
| F-17 |
The following table presents as of December 31, 2024 the Company’s assets and liabilities subject to measurement at fair value on a recurring basis (in thousands):
| Fair Value Measurements as of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | - | $ | - | $ | ||||||||||
| Total Assets | $ | $ | - | $ | - | $ | ||||||||||
| Liabilities: | ||||||||||||||||
| Convertible notes payable at fair value | $ | - | $ | - | $ | $ | ||||||||||
| Liability Classified Warrants | - | - | ||||||||||||||
| Total Liabilities | $ | - | $ | - | $ | $ | ||||||||||
The following table presents additional information about the Convertible Notes Payable subject to measurement at fair value on a recurring basis and warrant liabilities, for which the Company used unobservable inputs (Level 3) (in thousands):
Schedule of Additional Information About the Financial Liabilities Subject To Measurement at Fair Value
Convertible Notes Payable | Liability Classified Warrants | |||||||
| Balance as of December 31, 2023 | $ | - | $ | - | ||||
| Fair value at Issuance | ||||||||
| Conversion of convertible notes | ( | ) | - | |||||
| Change in fair value | ( | ) | ( | ) | ||||
| Balance as of December 31, 2024 | $ | $ | ||||||
| Conversion of convertible notes | ( | ) | - | |||||
| Interest expense | - | |||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Gain on settlement of convertible note | ( | ) | - | |||||
| Balance as of December 31, 2025 | $ | $ | - | |||||
During the year ended December 31, 2025, there were no transfers between Level 1 and Level 2, nor into or out of Level 3.
Digital Assets
Digital assets are measured at fair value on a recurring basis using quoted prices in their principal market (Level 1 inputs). The Company has designated a principal market based on the market the Company has access to and that has the greatest volume and level of orderly transactions for BTC. The Company reassesses its principal market when facts and circumstances change, including but not limited to when new markets become accessible, or the volume/activity in the current principal market declines.
Convertible Notes Payable
As discussed in Note 8, on October 31, 2024, the Company and Nirland agreed to amend the Senior Secured Promissory Note entered into by the Company and Nirland on August 6, 2024 (the “August 2024 Nirland Note”), whereby the August 2024 Nirland Note was amended to provide for the conversion of the August 2024 Nirland Note into shares of Common Stock, at Nirland’s discretion, in a multiple of any unpaid amounts, if not otherwise previously paid, pursuant to the conversion rate contained therein. The August 2024 Nirland Note was then amended for a second time on November 22, 2024. On February 12, 2025, the August 2024 Nirland Note was repaid in full.
Additionally,
as discussed in Note 8, during November 2024, the Company issued to Alliance Global Partners (“A.G.P.”) a convertible promissory
note (the “A.G.P. Convertible Note”) in the principal amount of $
The Company elected to account for the August 2024 Nirland Note and A.G.P. Convertible Note (collectively the “Convertible Notes Payable”) at fair value. The fair value of the Convertible Notes Payable is estimated each period using a binomial lattice model. Significant estimates in the binomial lattice model include the Company’s stock price, volatility, risk-free rate, corporate bond yield, credit spread, probability of default, and recovery upon default.
| F-18 |
The fair value of the August 2024 Nirland Note and A.G.P. Convertible Note as of December 31, 2024 were estimated using a binomial lattice model.
The following table outlines the range of significant unobservable inputs used in calculating the fair value of the August 2024 Nirland Note as of the dates noted below:
Schedule of Fair Value of Input
October 31, 2024 |
November 22, 2024 |
December 31, 2024 |
||||||||||
| Stock Price | $ | $ | $ | |||||||||
| Term (years) | ||||||||||||
| Corporate bond yield | % | % | % | |||||||||
| Credit Spread | % | % | % | |||||||||
| Probability of Default | % | % | % | |||||||||
| Recovery upon default | % | % | % | |||||||||
| Volatility | % | % | % | |||||||||
As of December 31, 2025, no obligations remain under the August 2024 Nirland Note (refer to Note 8 for details) and therefore only the fair value of the A.G.P. Convertible Note was estimated using a binomial lattice model.
The following table outlines the range of significant unobservable inputs used in calculating the fair value of the A.G.P. Convertible Note as of the dates noted below:
Schedule of Fair Value of Assumptions
November 25, 2024 | December 31, 2024 | December 31, 2025 | ||||||||||
| Stock Price | $ | $ | $ | |||||||||
| Term (years) | ||||||||||||
| Corporate bond yield | % | % | % | |||||||||
| Credit Spread | % | % | % | |||||||||
| Probability of Default | % | % | % | |||||||||
| Recovery upon default | % | % | % | |||||||||
| Volatility | % | % | % | |||||||||
Liability Classified Warrants
Liability Classified Warrants The A.G.P. 2024 Warrants, as defined in Note 18, are accounted for as liabilities in accordance with ASC 815-40 and are presented within Warrant liabilities in the consolidated balance sheets. Warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within other income (expense), net in the consolidated statements of operations and comprehensive loss.
The measurement of the A.G.P. 2024 Warrants is classified as Level 3 due to the use of an option-pricing model that utilizes unobservable inputs and requires significant judgement. The Company estimated the fair value of the warrants issued as the issuance date, October 29, 2024, as of December 31, 2024 and as of December 31, 2025, using a Black-Scholes option-pricing model utilizing the following assumptions:
Schedule of Fair Value of Assumptions
| December 31, 2025 | December 31, 2024 | October 29, 2024 | ||||||||||
| Closing stock price | $ | $ | $ | |||||||||
| Contractual exercise price | $ | $ | $ | |||||||||
| Risk-free rate | % | % | % | |||||||||
| Estimated volatility | % | % | % | |||||||||
| Time period to expiration (in years) | ||||||||||||
6. Digital Assets
Adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets:
Effective during the third quarter of 2025, the Company adopted ASU 2023-08, which requires entities to measure crypto assets at fair value with changes recognized in the Consolidated Statement of Operations each reporting period. The Company’s did not hold any digital assets prior to the release of ASU 2023-08 and no accounting for the transition guidance was necessary.
The following table presents a reconciliation of the fair values of the Company’s investments in digital assets as of December 31, 2025.
Schedule of Investments Digital Assets
| Digital Assets | ||||
| Balance as of December 31, 2024 | $ | - | ||
| Purchases | ||||
| Dispositions | ( | ) | ||
| Realized losses on dispositions | ( | ) | ||
| Balance as of December 31, 2025 | $ | - | ||
The Company disposed of all digital asset holdings during the fourth quarter of the year ended December 31, 2025.
| F-19 |
7. Leases
During the year ended December 31, 2024, the Company entered into an operating lease for laboratory space. The remaining lease terms for the operating lease is approximately one year and does not provide a renewal option. The Company has elected the short-term lease policy election, which allows the Company to exclude from recognition leases with an original term of 12 months or less.
Upon
commencement of the laboratory lease on March 7, 2024, the Company recorded a right-of-use asset of $
Lease costs associated with the Company’s operating and short-term leases are recorded within general and administrative expense in the consolidated statement of operations and comprehensive loss. The following table sets forth information about our lease costs for the year ended December 31, 2025 and 2024 (in thousands):
Schedule of Lease Cost
| Lease Cost | December 31, 2025 | December 31, 2024 |
||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Variable lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
The following table sets forth information about our operating lease for the year ended December 31, 2025 and 2024 (in thousands):
Schedule of Operating Lease Liabilities
| Supplemental cash flow and other information | December 31, 2025 | December 31, 2024 |
||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
ROU assets obtained in exchange for lease liabilities | - | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The Company’s future minimum lease payments for our operating lease as of December 31, 2025 are as follows (in thousands):
Schedule of Future Minimum Lease Payments For Operating Lease
December 31, 2025 | ||||
| Year ending December 31, | ||||
| 2026 | $ | |||
| Total | ||||
| Less: imputed interest | ( | ) | ||
| Total lease liability | $ | |||
| F-20 |
8. Convertible Notes Payable
Convertible Promissory Notes Payable
During
March 2023, the Company issued a convertible promissory note payable (the “Convertible Promissory Notes Payable”) with an
aggregate principal amount of $
On
October 9, 2024, the Company and the loan holder signed an extension to extend the maturity date from September 20, 2024 to October 20,
2024 with the option for the Company to further extend the maturity date two times, each by an additional 30-day period. The Company
exercised both options to extend the maturity date to December 19, 2024 which included interest previously payable as well as the principal.
As consideration for extending the maturity date, the Company amended the form of repayment of the remaining interest due on the loan.
As payment for the interest, the Company issued the loan holder, (i) $
On
March 6, 2025, the Company reached a Settlement Agreement (the “Settlement Agreement”) with the loan holder to pay $
In
connection with the Settlement Agreement, the Company entered into a consulting agreement with a third party to negotiate the
settlement of the Convertible Promissory Note Payable with the loan holder on behalf of the Company. In exchange for negotiating the
Settlement Agreement, the Company agreed to pay $
For
the years ended December 31, 2025 and December 31, 2024, the Company incurred interest expense on the Convertible Promissory Note Payable
of nil and $
August 2024 Nirland Note
On
August 6, 2024, the Company issued a Senior Secured Promissory Note to Nirland (the “ August 2024 Nirland Note”) with an
original principal amount of $
On October 31, 2024, the Company and Nirland entered into an amendment to the August 2024 Nirland Note that introduced a conversion feature permitting the holder to convert outstanding amounts into shares of the Company’s common stock and removed certain provisions related to mandatory prepayment and participation in future financings. The amendment was accounted for as a debt extinguishment as the modified terms were determined to be substantially different from the original instrument.
The
Company determined the fair value of the August 2024 Nirland Note to be $
As
of October 31, 2024, a loss on debt extinguishment of $
On November 22, 2024, the Company and Nirland entered into a second amendment modifying the conversion provisions and restricting conversion prior to stockholder approval under Nasdaq rules. In connection with this amendment, the Company elected the fair value option under ASC 825. At the end of each reporting period, the Company calculates the fair value of the August 2024 Nirland Note, and any changes in fair value are reported in the current period’s consolidated statements of operations and comprehensive loss.
For
the year ended December 31, 2024, the Company recorded a $
| F-21 |
On
December 9, 2024, Nirland converted $
During
January and February 2025, Nirland converted approximately $
As of December 31, 2025, the August 2024 Nirland Note had been fully settled and no amounts remained outstanding, and the Company had no further obligations under the note.
A.G.P. Convertible Note
A.G.P
was a financial advisor to both MURF and Conduit Pharmaceuticals, Limited (“Old Conduit”) in connection with the Merger on
September 22, 2023. Upon the completion of the Merger, A.G.P.: (i) received a cash fee of $
On
November 25, 2024, the Company issued to A.G.P. a convertible promissory note (the “A.G.P. Convertible Note”) in the principal
amount of $
At
any time prior to the full payment of the convertible promissory note, provided that the A.G.P. has given at least three business days
written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount
and all interest accrued converted into shares of the Company’s common stock, at a fixed price of $
| F-22 |
The Company may prepay the convertible promissory note in whole or in part. In the event of certain Events of Default (as defined in the convertible promissory note), all outstanding principal and accrued interest under the Convertible Note will become, or may become at A.G.P.’s election, immediately due and payable to the A.G.P.
The Company elected to account for the A.G.P. Convertible Note at fair value under ASC 825. The Company determined that the substantive conversion option within the A.G.P. Convertible Note falls under the guidance within ASC 825 that notes that if a significant modification of debt occurs an entity is able to make an accounting election on that date to account for that debt under the fair value option. At the end of each reporting period, the Company calculates the fair value of the A.G.P. Convertible Note, and any changes in fair value are reported in the current period’s consolidated statements of operations and comprehensive loss. The change in fair value attributable to instrument-specific credit risk, if any, will be recognize within other comprehensive income each reporting period. As an accounting policy, the Company elected to present interest expense separately from other changes in the A.G.P. Convertible Note’s fair value. Interest expense will be presented within Interest expense, net, while the other changes in the fair value with be presented within other income (expense), net in the consolidated statements of operations and comprehensive loss.
The
Company determined the fair value of the A.G.P. Convertible Note to be $
During the year
ended December 31, 2025, the holder of the A.G.P. Convertible Note converted $
During November 2025, the Company and A.G.P. agreed to extend the maturity date of the A.G.P. Convertible Note six months from November 25, 2025 to May 25, 2026. The Company did not pay any consideration to induce the extension of the maturity date.
On
December 31, 2025, the Company remeasured the fair value of the A.G.P. Convertible Note through the use of a binomial lattice model and
calculated a fair value of approximately $
| F-23 |
9. Loans Payable
Loans
On
May 1, 2022, the Company entered into two non-interest-bearing loan agreements totaling $
On
October 9, 2024, the parties amended the loan agreements to extend the maturity date to
The
Company repaid the remaining principal balance of $
October 2024 Nirland Note
In
October 2024, the Company issued a $
In
December 2024, the Company reduced the exercise price of the PIPE Warrants held by Nirland to $
The
Company made additional repayments of $
For
the year ended December 31, 2025, the Company recorded approximately $
A.G.P. Bridge Note
On
October 29, 2024, the Company entered into a Bridge Loan Agreement (the “Bridge Agreement”), with A.G.P., pursuant to which
AGP. made an advance (the “Advance”) to the Company in an amount not to exceed $
In
connection with the Advance, the Company issued a promissory note (the “A.G.P. Bridge Note”) to A.G.P. in the original principal
amount of $
As
noted above, the Company issued warrants to A.G.P. to purchase up to
| F-24 |
During
the year ended December 31, 2024, the Company recorded and paid approximately $
10. Research and Development Expense
August 2024 License Agreement
On August 7, 2024, the Company and AstraZeneca AB (PUBL) (“AstraZeneca”) entered into a License Agreement, dated August 7, 2024 (the “August 2024 License Agreement”). Pursuant to the August 2024 License Agreement, AstraZeneca agreed to grant a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for the development and commercialization of the Licensed Products under the August 2024 License Agreement.
As
consideration for the grant of the license, the Company (i) granted AstraZeneca Common Stock pursuant to a stock issuance agreement (the
“Issuance Agreement”), (ii) paid AstraZeneca an up-front payment of $
AstraZeneca has been granted the right of first negotiation to develop, manufacture, and commercialize a Licensed Product if the Company receives an offer for, or solicits, a transaction where a third party would obtain the right to develop, manufacture, or commercialize a Licensed Product. If AstraZeneca exercises such right, the parties will negotiate in good faith for an agreed period of time on an exclusive basis.
Either party may terminate the August 2024 License Agreement for material breach (subject to a cure period) or insolvency of the other party. The Company may terminate the August 2024 License Agreement for convenience (in its entirety or on a Licensed Product-by-Licensed Product basis). In addition, AstraZeneca may terminate the August 2024 License Agreement in certain circumstances, including (but not limited to) the Company ceasing development of all Licensed Products (subject to certain exceptions for normal pauses or gaps between clinical studies).
As a result of the above, the Company will no longer fund the development of AZD1656 or AZD5904 under the terms of the Exclusive Funding Agreement, dated March 26, 2021 with St George Street Capital (the “Funding Agreement”). In this regard, the Company previously entered into a deed of amendment amending such Funding Agreement. The parties agreed that the project funding provisions of such Funding Agreement whereby the Company had the right to fund a project or refer other parties to St George Street Capital, were amended to provide that St George Street Capital must still include the Company in any project funding opportunities and requests but may now seek other third-parties to fund projects in addition to the Company. In November and December 2024, the Company received a letter from St George Street Capital and formal complaints filed with the Intellectual Property Office claiming the Company was not the sole owner of the AZD 1656 co-crystal patent. See note 15 for additional details on the claim.
Sarborg Service Agreement – Related Party
On December 12, 2024, the Company entered into a Services Agreement (the “Sarborg Service Agreement”) with Sarborg Limited (“Sarborg”), a Cayman Islands company and related party of the Company. See Note 16 for further reference to the relationship between the Company and Sarborg. Under the terms of the Sarborg Service Agreement, Sarborg will provide algorithmic and cybernetic technology services to CDT, including the development of decision-support tools and advanced cybernetic systems tailored to enhance CDT’s decision-making processes and maximize the value of its pharmaceutical asset portfolio.
| F-25 |
Sarborg will perform the services to CDT comprised of three phases: the Initial Phase (0-24 weeks) focuses on establishing a foundation for collaboration and aligning Sarborg’s services with CDT’s strategic goals; the Development Phase (24-36 weeks) involves building technological infrastructure, including dashboards and predictive models; and the Ongoing Services Phase (36-52 weeks) ensures the sustained functionality and relevance of Sarborg’s deliverables while supporting CDT’s growth through iterative improvements and updates. Sarborg will create specific deliverables, including reports, computer programs, software applications, APIs, mobile applications, source code, written technical specifications and designs, operating and maintenance manuals, and other recorded data and information arising from or relating to the services. Sarborg will provide all necessary resources to perform the services and deliver the deliverables in accordance with the Sarborg Service Agreement.
The Sarborg Service Agreement has an initial term of 12 months, which commenced on the effective date, and may be renewed or extended upon mutual written agreement of the parties. Either party may terminate the Sarborg Service Agreement for any reason upon 90 days’ written notice or immediately upon written notice if the other party breaches any material term of the Sarborg Service Agreement and fails to cure such breach within thirty days or becomes insolvent, files for bankruptcy, or is placed under the control of a receiver, trustee, or similar authority.
The Sarborg Service Agreement includes provisions for the ownership and use of intellectual property. Sarborg will own its pre-existing intellectual property rights, including proprietary tools and methodologies used in the performance of the services. CDT will own all deliverables resulting from the services performed by Sarborg under the Sarborg Service Agreement.
The Sarborg Service Agreement provides Sarborg with registration rights for any Common Stock of CDT that Sarborg receives as consideration under the Sarborg Service Agreement. In such event, CDT will use commercially reasonable efforts to (i) file a registration statement covering the resale of the Common Stock within 60 days after the issuance; and (ii) ensure that such registration statement becomes effective within 90 days after filing. This Agreement also includes confidentiality obligations, representations and warranties, indemnification, limitation of liability, and insurance requirements.
In
consideration of the services, CDT agreed to pay Sarborg an initial cash payment of $
The
Company made an initial cash payment of $
Under
the Sarborg Service Agreement, the Company will be provided with a dashboard that will be utilized for both the Company’s existing
and future asset portfolio. Specifically, the dashboard includes a clinical trial monitoring functionality and a dynamic pharmaceutical
patent landscape module to assess both the Company’s current assets undergoing clinical trials and delisted patents in the marketplace
that may be overlooked by other market participants. These features will be used by management to monitor progress, assess trial status,
identify new opportunities, and support decision-making across all current and future development programs. The Company assessed the
guidance in ASC 730 and determined that $
| F-26 |
All other costs under the Sarborg Service Agreement shall be expensed as incurred and recorded within research and development expense in the consolidated statement of operations and comprehensive loss, as the services are designed to aid in the Company’s research and development activities.
During
the year ended December 31, 2025, Sarborg was paid $
Sarborg Additional Agreement
Effective
March 31, 2025, the Company entered into an additional license and use agreement (the “Sarborg Additional Agreement”) with
Sarborg, a related party, covering certain additional deliverables and incorporating a new scope of work focused on analysis of the Company’s
acquired AstraZeneca assets. The term of the Sarborg Additional Agreement is for six months and provides for the payment, in aggregate,
of $
First Addendum to the Sarborg Additional Agreement
Effective
July 1, 2025 the Company entered into an Addendum (the “First Addendum”) to the Additional Agreement with Sarborg, a related
party. Under the terms of the Addendum, Sarborg will expand the scope of the Additional Agreement to provide external analysis of third-party
pharma companies assets suitable for drug re-purposing and evaluate the efficacy of the assets utilizing CDT’s license to Sarborg’s
machine learning platform. The scope of work is expected to be completed in 4 weeks, which may be renewed or extended upon the mutual
written agreement of the parties. The total consideration for the additional services, payable in cash in two tranches, was $
Second Addendum to the Sarborg Additional Agreement
Effective August 11, 2025 the Company entered into Addendum 2 (the “Second Addendum”) to the Additional Agreement with Sarborg. Under the terms of the Second Addendum, Sarborg expanded the scope of work to integrate a Cryptocurrency AI Agent, developed specifically for identifying, forecasting and recommending digital currencies into CDT Equity’s operations as part of its treasury strategy.
The
term of the Second Addendum is a minimum of four (4) months, which may be renewed or extended upon the mutual written agreement of
the Company and Sarborg. The initial consideration for the expanded scope of work was $
| F-27 |
In
total, the Company recorded $
Manoira Joint Development Agreement
On June 3, 2025, the Company entered into a joint development agreement (the “Joint Development Agreement”) with Manoira Corporation (“Manoira”) for a term of one year, which will be automatically renewed for successive one-year terms unless advance termination notice is provided in accordance with the terms of the Joint Development Agreement. Manoira is an entity controlled by Dr. Andrew Regan, of which he is sole director, and of which Chele Chiavavcci Farley is a shareholder, and is therefore considered a related party of the Company. Refer to Note 16 for additional details.
Pursuant to the Joint Development Agreement, CDT granted Manoira a non-exclusive, non-transferable, non-sublicensable, fully paid-up, royalty-free license to the intellectual property rights related to the pharmaceutical compounds known individually and together as AZD1656 and AZD5658 (the “CDT Assets”). Manoira will evaluate the CDT Assets’ applicability in animal health, explore veterinary market opportunities, and provide data from the evaluations to inform CDT’s human clinical programs. The license does not grant Manoira the right to distribute, market, promote or sell the products or services that are related to or incorporate the CDT Assets.
Effective
June 3, 2025, in exchange for the approximate $
11. Share Based Compensation
On
September 22, 2023, in connection with the Merger, the Company adopted the CDT Equity Inc. 2023 Stock Incentive Plan (the “2023
Plan”). The 2023 Plan became effective upon the closing of the Merger. The 2023 Plan initially provided for the issuance of up
to
| F-28 |
On
August 5, 2025, at the Company’s 2025 Annual Meeting of Stockholders, stockholders approved an amendment and restatement of the
Company’s 2023 Stock Incentive Plan (as amended, the “Amended 2023 Stock Incentive Plan”) to authorize an additional
On
January 1, 2026, in accordance with the 2023 Plan, the number of authorized shares under the 2023 plan increased by
Board of Directors Shares
On
March 30, 2025, certain non-employee directors elected to receive their unpaid cash retainers due through the period ended June 30, 2025,
under the Director Compensation Program, in the form of fully vested shares of Common Stock. In total, $
On
April 16, 2025,
On
August 5, 2025, the Company approved and granted equity awards to non-employee directors under the 2023 Plan, in the form of
Cryptocurrency Consulting
Effective
June 27, 2025, the Company entered into an agreement (the “Crypto Consulting Agreement”) for a third-party consultant to
evaluate and advise on the potential adoption of a part cryptocurrency treasury reserve strategy. The Crypto Consulting Agreement contains
a term of 12 months and required compensation of $
Management Shares
Effective
September 19, 2025,
Restricted Stock
In
connection with the Merger, and by Unanimous Written Consent of the Board of Directors, the then Chief Financial Officer of the Company
was granted
| F-29 |
By
unanimous written consent of the Board, the Company granted
The following table summarizes restricted stock activity for the 2023 Plan:
Schedule of Restricted Stock Activity
| Number of Awards | Weighted Average Grant Date Fair Value Per Unit | |||||||
| Outstanding at December 31, 2024 | - | $ | - | |||||
| Granted | $ | |||||||
| Cancelled/forfeited | - | $ | - | |||||
| Vested | ( | ) | $ | ( | ) | |||
| Outstanding at December 31, 2025 | - | $ | - | |||||
Stock Options
The Company estimated the fair value of stock options granted in the periods presented using a Black-Scholes option-pricing model utilizing the following weighted-average assumptions:
Schedule of Fair Value of Stock Option Granted
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Expected volatility (%) | % | % | ||||||
| Expected term (years) | ||||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected dividend yield (%) | % | % | ||||||
The
Company granted
| F-30 |
The following table summarizes stock activity for the 2023 Plan:
Schedule of Stock Option Activity
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Outstanding at December 31, 2024 | $ | $ | - | |||||||||||||
| Granted | $ | - | $ | - | ||||||||||||
| Cancelled/forfeited | ( | ) | $ | - | $ | - | ||||||||||
| Exercised | - | $ | - | - | $ | - | ||||||||||
| Outstanding at December 31, 2025 | $ | $ | - | |||||||||||||
| Exercisable | $ | $ | - | |||||||||||||
| Unvested | $ | $ | - | |||||||||||||
The
aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair
value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s
common stock. As of December 31, 2025, the total compensation cost related to non-vested option awards not yet recognized was $
12. Income Taxes
Loss from operations before income taxes for the years ended December 31, 2025 and 2024 is summarized below (in thousands):
Schedule of Income before Income Tax, Domestic and Foreign
| 2025 | 2024 | |||||||
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Loss from operations before income taxes: | ||||||||
| US | ( | ) | ( | ) | ||||
| Foreign | ( | ) | ( | ) | ||||
| Loss from operations before income taxes | ( | ) | ( | ) | ||||
The provision (benefit) for income taxes for the years ended December 31, 2025 and December 31, 2024 is as follows (in thousands):
Schedule of Provision for Income Tax
| 2025 | 2024 | |||||||
| For The Years Ended | ||||||||
| 2025 | 2024 | |||||||
| Current | $ | $ | ||||||
| Federal | - | - | ||||||
| State | - | - | ||||||
| Foreign | - | - | ||||||
| Current income tax | - | - | ||||||
| Deferred | ||||||||
| Federal | ( | ) | ( | ) | ||||
| State | ( | ) | ||||||
| Foreign | ( | ) | ( | ) | ||||
| Deferred income tax | - | - | ||||||
| Net Income Tax Expense | $ | - | $ | - | ||||
| F-31 |
The total unrecognized tax benefits for the years ended December 31, 2025 and December 31, 2024, are summarized below (in thousands):
Schedule of Unrecognized Tax Benefits
| 2025 | 2024 | |||||||
| For The Years Ended | ||||||||
| 2025 | 2024 | |||||||
| Unrecognized tax benefits, beginning of period | $ | - | $ | - | ||||
| Increases (decreases) for prior year tax positions | - | - | ||||||
| Decreases for expiration of statute of limitations | ||||||||
| Settlements | ||||||||
| Unrecognized tax benefits, end of period | $ | - | $ | - | ||||
The Company accounts for uncertain tax positions in accordance with ASC 740, Income Taxes. As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits. Interest and penalties related to uncertain tax positions, if any, are recognized as a component of income tax expense, and none were accrued as of December 31, 2025 and 2024.
The total income taxes paid (net of refunds received) for the years for the years ended December 31, 2025 and December 31, 2024, are summarized below (in thousands):
Schedule of Income Taxes Net of Refunds
| 2025 | 2024 | |||||||
| For The Years Ended | ||||||||
| 2025 | 2024 | |||||||
| Federal | $ | - | $ | - | ||||
| Foreign | - | - | ||||||
| Total | $ | - | $ | - | ||||
The following summarizes the jurisdictions that exceeded 5% of the Company’s total income taxes paid (net of refunds) for the years presented below (in thousands):
| For The Years Ended | ||||||||
| 2025 | 2024 | |||||||
| Federal | $ | - | $ | - | ||||
| Foreign | - | - | ||||||
| Total | $ | - | $ | - | ||||
The
following table reconciles the U.S. federal statutory income tax rate of
Schedule of Effective Income Tax Rate Reconciliation
| Taxes at federal statutory rate | $ | (6,186 | ) | 21.0 | % | $ | (3,745 | ) | 21.0 | % | ||||||
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | |||||||||||||||
| Taxes at federal statutory rate | $ | ( | ) | % | $ | ( | ) | % | ||||||||
| State income tax, net of federal benefit | - | % | - | % | ||||||||||||
| Foreign tax effects: | ||||||||||||||||
| United Kingdom: | ||||||||||||||||
| NOL adjustment | - | % | - | % | ||||||||||||
| Change in valuation allowance | - | % | - | % | ||||||||||||
| Other | ( | ) | % | ( | ) | % | ||||||||||
| Cayman: | ||||||||||||||||
| Foreign Rate Differential | - | % | - | % | ||||||||||||
| Change in valuation allowance | - | % | - | % | ||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||
| Non-deductible loss on stock issuance | - | % | - | % | ||||||||||||
| Convertible debt | - | % | - | % | ||||||||||||
| Other permanent items | - | % | - | % | ||||||||||||
| Other adjustments: | ||||||||||||||||
| Other | - | % | ( | ) | % | |||||||||||
| State Re-Rate | - | % | - | % | ||||||||||||
| Total provision (benefit) for income taxes | $ | - | % | $ | - | % | ||||||||||
The tax effects of temporary differences which give rise to significant portions of deferred tax assets are as follows as of December 31 (in thousands):
Schedule of Deferred Tax Assets and Liabilities
| 2025 | 2024 | |||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Total deferred tax Assets: | ||||||||
| Stock options | $ | $ | ||||||
| Transaction Costs | ||||||||
| Research & Development | ||||||||
| Accruals | ||||||||
| Net operating loss carryforward | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred income tax asset | - | - | ||||||
| Total deferred tax liabilities: | ||||||||
| Total deferred tax liabilities | - | - | ||||||
| Net deferred income tax liability | $ | - | $ | - | ||||
As
of December 31, 2025 and 2024, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $
As of December 31, 2025, the Company had state NOL carryforwards of approximately $5.5 million, consisting of $1.9 million that began to expire in 2024 and $3.7 million with indefinite carryforward periods. State NOL carryforwards were approximately $1.9 million as of December 31, 2024.
As
of December 31, 2025, the Company had foreign NOL carryforwards of approximately $
| F-32 |
The
Company evaluates the realizability of its deferred tax assets at each reporting date. Based on the weight of available evidence, including
cumulative losses since inception, the Company concluded that it is more likely than not that its deferred tax assets will not be realized.
Accordingly, the Company maintains a full valuation allowance, which totaled approximately $
The Company’s ability to utilize its NOL carryforwards may be limited under Section 382 of the Internal Revenue Code if an ownership change occurs. The Company has not completed a formal Section 382 analysis, and therefore the extent to which NOL carryforwards may be subject to limitation is uncertain. Deferred taxes have not been recorded for outside basis differences related to investments in foreign subsidiaries because such differences are not expected to result in taxable income in the foreseeable future.
Sale of Wholly-Owned Subsidiary - Tax Treatment
Under
Section 1032 of the Internal Revenue Code, a corporation does not recognize gain or loss on the issuance of its own stock. Accordingly,
the issuance of common stock as consideration for the sale was not a taxable event to the Company. The Company’s amount realized
on the disposition was zero, as the stock issued represents consideration paid rather than proceeds received. The Company’s adjusted
tax basis in CPL was de minimis. The loss recognized under GAAP is treated as a permanent book-tax difference and has no current or deferred
income tax effect. This permanent difference is reflected in the effective tax rate reconciliation as a non-deductible loss on stock
issuance of approximately $
Upon completion of the disposition, the outside basis difference was resolved with no incremental tax, as CPL operated in a zero-tax jurisdiction, and the disposition did not generate taxable gain.
13. Common Stock and Preferred Stock
Common Stock
As
of December 31, 2025 and 2024, the Company has authorized the issuance of up to
As
of December 31, 2025 and 2024 there were
Holders of the Common Stock are entitled to one vote per share, and to receive dividends, on and if declared by the board of directors and, upon liquidation or dissolution, are entitled to receive all assets available for distribution, subordinate to the rights, preferences, and privileges of any outstanding preferred shares (if any) with respect to dividends and in connection with liquidation, winding up and dissolution of the Company. The holders have no preemptive or other subscription rights.
Preferred Stock
As
of December 31, 2025 and 2024, the Company has authorized the issuance of up to
At-the-Market Offering
On
October 23, 2024, the Company entered into the Sales Agreement with A.G.P. relating to shares of the Company’s Common Stock. In
accordance with the terms of the Sales Agreement, the Company may offer and sell shares of our Common Stock having an aggregate offering
price of up to $
The
compensation to A.G.P. for sales of common stock sold pursuant to the Sales Agreement will be equal to
During
the year ended December 31, 2025, the Company sold
During
the year ended December 31, 2024, the Company sold
No shares remained to be sold under the Sales Agreement as of December 31, 2025.
| F-33 |
14. Net Loss Per Share
The following table presents the calculation of basic and diluted earnings/(net loss) per share (in thousands, except share amounts and per share data):
Schedule of Basic and Diluted Net Loss Per Share
For the years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net loss – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average shares used in computing net loss per share - diluted | ||||||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
Potentially dilutive securities (upon conversion) that were not included in the diluted per share calculations because they would have been anti-dilutive were as follows:
Schedule of Potentially Dilutive Securities
| December 31, 2025 | December 31, 2024 | |||||||
| Public warrants | ||||||||
| A.G.P. Warrants | ||||||||
| Convertible Promissory Notes Payable | - | |||||||
| Stock Options | ||||||||
| August 2024 Nirland Note | - | |||||||
| A.G.P. Convertible Note | ||||||||
| March 2024 Warrants | ||||||||
| April 2024 Warrants | ||||||||
| A.G.P. 2024 Warrants | ||||||||
| Antidilutive Securities | ||||||||
For
the year ended December 31, 2025,
15. Commitments and Contingencies
Legal Proceedings
The Company is subject to certain claims and contingent liabilities that arise in the normal course of business. While we do not expect that the ultimate resolution of any of these pending actions will have a material effect on our consolidated results of operations, financial position or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any legal action, pending or otherwise, does not become material in the future.
On
September 7, 2023, following the merger between Conduit Pharmaceuticals Limited and Conduit Merger Sub, Inc., a Cayman Islands
exempted company, Strand filed a claim in the Business and Property Courts of England and Wales claiming it was entitled to be paid
the sum of $
| F-34 |
Prior to the issuance of
the judgment, the Company completed the sale of CPL to Corvus, pursuant to the Sale and Purchase Agreement. See Note 4, Note 16 and
Note 18 for further discussion of the sale of CPL in relation to the Strand litigation. In connection with the transaction, the
Company obtained legal advice and structured the arrangement such that CPL retained the obligation associated with the Strand
litigation following the sale on December 8, 2025. However, as discussed in Note 4, the Company evaluated the accounting
implications of the transaction, including the assessment of isolation, and concluded that the arrangement did not satisfy isolation
of the Company from Conduit Pharmaceuticals Limited (“CPL”). Accordingly, in connection with the judgment, Conduit
Pharmaceuticals Limited recorded a $
Separately, during November and December 2024, the Company received a letter from St George Street Capital and formal complaints filed with the Intellectual Property Office claiming the Company was incorrectly assigned the US Application, and was not the correct owner, of the AZD 1656 co-crystal patent. In January 2025, Conduit issued a counter statement to the Intellectual Property Office disputing the claim filed by St George Street Capital. The litigation challenges the registration of the patent and the Company does not believe there to be any financial implications from the litigation. As of December 31, 2025, the damages sought by St George Street Capital are unknown and the potential contingency is not considered probable. As such, the Company has not accrued a loss contingency in the accompanying financial statements. We intend to vigorously defend against these IP claims. Regardless of the eventual outcome, the patent dispute may impact our business due to, among other things, legal costs and the diversion of the attention of our management.
16. Related Party Transactions
Corvus Capital Limited
Corvus
Capital Limited (“Corvus”) is a significant investor in the Company through subscribing to
For
the years ended December 31, 2025 and 2024, the Company incurred director travel expenses payable to the member of the board of directors
of approximately $
Corvus - Sale of CPL
See Note 4 and Note 15 for discussion of the sale of CPL to Corvus.
Nirland
On August 6, 2024, the Company entered into the August 2024 Nirland Note with Nirland, a related party of the Company. The Company determined that Nirland was a related party due to Nirland’s ownership interest in the Company concurrently with the execution of the August 2024 Nirland Note. Additionally, on October 28, 2024, the Company issued the October 2024 Nirland Note to Nirland, and on October 31, 2024, the Company and Nirland amended the August 2024 Nirland Note, and on November 22, 2024, the Company and Nirland amended the August 2024 Nirland Note for a second time. During the first quarter of the year ended December 31, 2025, the Company repaid Nirland through conversions and a final cash payment. As of December 31, 2025, there was no remaining balance payable to Nirland. Refer to Note 8 and Note 16 above for additional information.
| F-35 |
Sarborg
On
December 12, 2024, the Company entered into the Sarborg Service Agreement with Sarborg. During 2025, the Company and Sarborg entered
into the Sarborg Additional Agreement, First Addendum to the Sarborg Additional Agreement and the Second Addendum to the Sarborg Additional
Agreement. Dr. Andrew Regan, a member of Conduit’s board of directors, also sits on the board of directors of Sarborg but does
not have an equity interest in Sarborg. During the year ended December 31, 2025, the Company recorded $
Manoira
On
June 3, 2025, the Company entered into a joint development agreement (the “Joint Development Agreement”) with Manoira Corporation.
Dr. Andrew Regan, Chief Executive Officer and member of the Board, also is a director and controlling member of Manoira. Through the
Joint Development Agreement, the Company and Manoira intend to jointly evaluate AZD1656, and any of its derivatives, as well as AZD5658,
in animal health indications and produce transitional data to inform the Company’s human clinical programs while exploring veterinary
market opportunities. The Company delivered shares of the Company’s Common Stock worth $
Officers and Directors
On
April 22, 2024, the Company issued in a private placement common stock purchase warrants (the “April Warrants”) to third
parties which also included certain directors, to purchase up to an aggregate of
As discussed above, in relation
to Corvus, the Company’s Compensation Committee approved a one-time payment of $
17. Other Expense, net
The following table presents other expense, net, for the years ended December 31, 2025 and 2024 (in thousands):
Schedule of Other Expense, Net
| 2025 | 2024 | |||||||
For the years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Other income: | ||||||||
| Change in fair value of warrant liability | ||||||||
| Change in fair value of convertible note payment | - | |||||||
| Gain on debt extinguishment | ||||||||
| Income Tax Refund | - | |||||||
| Unrealized foreign currency transaction gain | ||||||||
| Gain on waiver of accrued interest | - | |||||||
| Research and development tax receivable | - | |||||||
| Gain on the issuance of shares for services | - | |||||||
| Other | - | |||||||
| Total other income: | ||||||||
| Other expense: | ||||||||
| Loss on issuance of warrants | - | |||||||
| Loss on Debt Extinguishment | - | |||||||
| Loss on the change in fair value of convertible notes payable | - | |||||||
| Realized losses on disposition of digital assets | - | |||||||
| Realized foreign currency transaction loss | - | |||||||
| Other expense | ||||||||
| Total other expense | ||||||||
| Total expense, net | $ | ( | ) | $ | ( | ) | ||
| F-36 |
18. Warrants
Equity Classified Warrants
The Publicly Traded Warrants, Private Placement Warrants, March 2024 Warrants, the April 2024 Warrants and Pre-Funded Warrants (collectively the “Equity Classified Warrants”), are classified within permanent equity on the consolidated balance sheets, as the settlement amount would equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument).
Publicly Traded and Private Placement Warrants
Pursuant
to MURF’s initial public offering, the Company sold
Simultaneously
with the closing of its initial public offering, MURF consummated the private sale to the Sponsor of
Upon the closing of the Merger, the Company assumed the Publicly Traded Warrants and Private Placement Warrant. The Publicly Traded Warrant and Private Placement Warrant were amended to entitle each holder to purchase one share of the Company’s Common Stock.
March 2024 Warrants
On
March 20, 2024, the Company issued in a private placement equity classified common stock purchase warrants (the “March 2024 Warrants”)
to an investor to purchase up to an aggregate
Schedule of Black-Scholes Option Pricing Model
| March 20, 2024 | ||||
| Closing stock price | $ | |||
| Contractual exercise price | $ | |||
| Risk-free rate | % | |||
| Estimated volatility | % | |||
| Time period to expiration | ||||
| F-37 |
A
fair value of $
April 2024 Warrants
On
April 20, 2024, the Company issued in a private placement equity classified common stock purchase warrants (the “April 2024 Warrants”)
to shareholders’ of the Company to purchase up to an aggregate
| April 20, 2024 | ||||
| Closing stock price | $ | |||
| Contractual exercise price | $ | |||
| Risk-free rate | % | |||
| Estimated volatility | % | |||
| Time period to expiration | ||||
A
fair value of $
Pre-Funded Warrants
In
connection with the Sale and Purchase Agreement with Corvus, the Company issued Pre-Funded Warrants to purchase up to
| F-38 |
The Pre-Funded Warrants provide the holders with the right to exercise on a cash or cashless basis and do not contain any provisions that would require the Company to settle the warrants in cash or any other assets. The warrants are indexed to the Company’s own stock and meet all of the criteria for equity classification under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. Accordingly, the Pre-Funded Warrants are classified in additional paid-in capital within the Company’s consolidated statements of changes in stockholders’ deficit.
Because the exercise price of the Pre-Funded Warrants is nominal, the Company considers the shares underlying the Pre-Funded Warrants to be common stock equivalents that are substantively outstanding as of the issuance date. As a result, the underlying shares are included in basic and diluted weighted-average shares outstanding in accordance with ASC 260, Earnings Per Share.
The Pre-Funded Warrants include provisions that restrict the holder from exercising any portion of the warrants to the extent that, following such exercise, the holder and its affiliates would beneficially own more than 49.99% of the Company’s outstanding Common Stock.
During
the year ended December 31, 2025, the Company recorded the issuance of the Pre-Funded Warrants as an increase to additional paid-in capital
of $
Liability Classified Warrants
Pursuant to
subscription agreements,
The warrants issued to the PIPE Investors and the advisor contain materially the same terms and are exercisable for a period of five years, beginning on October 22, 2023.
The PIPE Warrants are exercisable for cash or on a cashless basis, at the holder’s option. The PIPE Warrants are not redeemable by the Company.
The
A.G.P. Warrants are exercisable for cash or on a cashless basis, at the holder’s option. The Company may call the A.G.P. Warrants
for redemption, in whole and not in part, at any time after the A.G.P. Warrants become exercisable and prior to their expiration, at
a price of $
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; |
| ● | if,
and only if, the reported last sale price of the Common Stock equals or exceeds $ |
| ● | provided there is a current registration statement in effect with respect to the shares of Common Stock underlying the A.G.P. Warrants for each day in the 30-trading day period and continuing each thereafter until the redemption date. |
| F-39 |
If the Company calls the A.G.P. Warrants for redemption as described above, our management will have the option to require any holder that wishes to exercise its A.G.P. Warrant to do so on a “cashless basis.” If our management takes advantage of this option, holders of A.G.P. Warrants would pay the exercise price by surrendering their A.G.P. Warrants for that number of shares of Common Stock as calculated pursuant to the A.G.P. Warrant. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of an A.G.P. Warrant redemption.
The
exercise of the A.G.P. 2024 Warrants and the issuance of the shares of Common Stock underlying the Warrants is subject to stockholder
approval under applicable rules and regulations of Nasdaq. The warrants are exercisable for a period of five years, beginning on the
stockholder approval date. The A.G.P 2024 Warrants are exercisable for cash, or on a cashless basis if at the time of exercise there
is no effective registration statement registering the resale of the warrant shares. The A.G.P. 2024 Warrants are not redeemable by the
Company. On October 29, 2024, the Company recorded a warrant liability of $
The PIPE Warrants, A.G.P. Warrants, and the A.G.P 2024 Warrants (collectively the “Liability Classified Warrants”) are classified as derivative liabilities because they do not meet the criteria in ASC 815-40 to be considered indexed to the entity’s own stock as the warrants could be settled for an amount that is not equal to the difference between the fair value of a fixed number of the entity’s shares and a fixed monetary amount. The Liability Classified Warrants are initially measured at fair value and are remeasured at fair value at subsequent financial reporting period end dates and upon exercise (see Note 5 for additional information regarding fair value).
On
December 11, 2024, the Company reduced the exercise price of the PIPE Warrants to be $
For
the years ended December 31, 2025 and 2024, the Company remeasured the fair value of the Liability Classified Warrants and recorded a
gain on the change in the fair value of $
19. Segments
The
Company has
The CODM uses consolidated net loss and budget-to-actual variances to assess the performance of the operating segment and determine if the Company is progressing towards its goals.
| F-40 |
The following table presents certain financial data for the Company’s reportable segment (in thousands):
Schedule of Financial Data for the Company’s Reportable Segment
| (Dollar amounts in thousands) | 2025 | 2024 | ||||||
| December 31, | ||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | ||||||
| Operating expenses: | ||||||||
| Research & development expenses-clinical asset development | $ | $ | ||||||
| Research & development expense – related parties | ||||||||
| Research & development expense – related parties - digital assets | - | |||||||
| General and administrative expenses – legal & professional fees | ||||||||
| General and administrative expenses – litigation liability accrual | - | |||||||
| General and administrative expenses – accounting & audit fees | ||||||||
| General and administrative expenses – salaries, payroll and stock-based compensation | ||||||||
| General and administrative expenses - issuance of common stock and pre-funded warrants | - | |||||||
| General and administrative expenses - other | ||||||||
| General and administrative expenses | ||||||||
| Total operating costs and expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other expenses: | ||||||||
| Other expense | ( | ) | ( | ) | ||||
| Other expense – digital assets | ( | ) | - | |||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Interest Income | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
Other segment items consist of the items within Note 17 to the consolidated financial statements.
20. Subsequent Events
Equity Purchase Agreement
On
January 16, 2026, the Company entered into a directed stock purchase agreement with an institutional investor relating to an equity line
of credit facility (the “ELOC”). Pursuant to the directed stock purchase agreement. the Company will have the right from
time to time at its option to sell to the purchaser up to $
The
Purchase Agreement is subject to certain customary conditions and limitations, including that (i) the Purchaser shall not be obligated
to purchase or acquire and shares of Common Stock that would result in its beneficial ownership exceeding 9.99% of the Company’s
then-outstanding voting power and (ii) the Purchaser shall not be obligated to purchase shares of Common Stock if the volume weighted
average price for the Common Stock on an advance notice date is less than a floor price of $
On March 3, 2026, the Company and
the institutional investor entered into an amendment to the ELOC. The amendment updated the definition of the regular price floor from
the minimum price as of the date of this agreement to $
Senior Secured Convertible Promissory Note
On March 3, 2026, the Company
entered into a securities purchase agreement with an institutional investor. Pursuant to the terms of the ELOC, the Company issued a senior
secured convertible Promissory Note with a total principal amount of up to $
Transactions with Investors of Sarborg Limited
On
February 19, 2026, the Company entered into a Securities Purchase Agreement with all of the stockholders of Sarborg. The investors of
Corvus agreed to sell to the Company, and the Company agreed to acquire from the investors, an aggregate of
As
consideration for the purchase, the Company has agreed to issue to the investors, in the aggregate: (i)
The
pre-funded warrants portion of the consideration transferred have an exercise price of $
Conversions of the A.G.P Convertible Note
Subsequent
to December 31, 2025, the holder of the A.G.P. Convertible Note converted $
Addendum to Consulting Agreement with NJS Foresight Bio-Advisory, LLC
On February 23, 2026, the
Company and NJS entered into an addendum to the NJS Agreement to extend the term of the NJS Agreement an additional twelve months from
its initial termination date, December 29, 2026, to December 29, 2027, unless terminated earlier in accordance with the terms of the NJS
Agreement. As consideration for entering into the addendum,
Addendum to Consulting Agreement with Thesprogen, PC Conversions
On February 24, 2026, the Company and Thesprogen entered into an addendum to the Thesprogen Agreement to extend
the term of the Thesprogen Agreement an additional twelve months from its initial termination date, June 28, 2026, to June 28, 2027, unless
terminated earlier in accordance with the terms of the Thesprogen Agreement. As consideration for entering into the addendum,
Agreement with Maxim Group LLC
On
February 6, 2026
Second Additional Agreement with Sarborg
On
January 2, 2026, the Company and Sarborg entered into the Second Additional Agreement. The Second Additional Agreement has a term of
six weeks and can be renewed upon the mutual written agreement of both parties. Total consideration payable from the Company to
Sarborg totals $
| F-41 |