Conduit Pharmaceuticals Inc.

Company Overview

Business Model: Conduit Pharmaceuticals Inc. (Conduit or the Company) operates by acquiring clinical assets from pharmaceutical companies, developing new treatments, extending intellectual property (IP) through solid-form technology, and commercializing products with life science companies. The Company evaluates novel artificial intelligence (AI) and cybernetics approaches for drug repurposing, IP, and asset selection, primarily through a collaboration with SARBORG Limited. Conduit leverages its Cambridge laboratory facility and solid-form experts to develop proprietary solid-form IP. The Company collaborates with external contract research organizations (CROs) and Key Opinion Leaders (KOLs) to manage and oversee clinical trials, aiming to efficiently advance assets through Phase II. Following successful Phase II trials, Conduit seeks licensing opportunities with large biotech or pharmaceutical companies for upfront milestone payments and royalty income streams.

Market Position: Conduit operates in a highly competitive pharmaceutical and biotechnology industry. The Company believes its competitive advantage stems from its focus on novel mechanisms (e.g., AZD1656 as an activator) and the repurposing of deprioritized assets. The global biotechnology market was valued at $1.68 trillion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 9.18% from 2024 to 2033. The global pharmaceutical market is forecast to grow an annualized 3.2% to $1.3 trillion over the next five years. Conduit targets specific therapeutic areas with significant market potential: Lupus Nephritis (global market valued at $3.3 billion in 2022, projected to reach $6.78 billion by 2032 with a CAGR of 10.3%), ANCA Vasculitis (seven major markets reached $339.0 million in 2023, expected to reach $534.3 million by 2034 with a CAGR of 4.22%), and Idiopathic Male Infertility (market size expected to grow from $3.72 billion in 2023 to $4.42 billion by 2028 at a CAGR of 3.54%).

Recent Strategic Developments:

• Business Combination: Completed a merger transaction on September 22, 2023, with Murphy Canyon Acquisition Corp., which subsequently changed its name to Conduit Pharmaceuticals Inc.
• AstraZeneca License Agreement: On August 7, 2024, Conduit was granted a license by AstraZeneca for HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications, and myeloperoxidase inhibitor AZD5904 for idiopathic male infertility. The agreement included a $1.5 million upfront cash payment and $1.6 million in common shares.
• Sarborg Service Agreement: On December 12, 2024, Conduit entered into a services agreement with SARBORG Limited, a related party, for an advanced AI and cybernetics platform. This involved an initial cash payment of $0.2 million and $0.2 million in common stock.
• Intellectual Property Development: Conduit wholly owns the intellectual property and development rights for solid-form Cocrystals of AZD1656, with pending international patent applications that, if granted, should expire no earlier than 2042. A patent for AZD1656 Co-crystal was granted in Japan, expiring November 2, 2042.
• Nasdaq Compliance: Following a delisting notice on December 17, 2024, Conduit was granted an extension by the Nasdaq Hearings Panel on March 5, 2025, to transfer to the Nasdaq Capital Market and demonstrate compliance with all listing rules by March 31, 2025. The Company regained compliance with the Bid Price Rule as of February 26, 2025, and expects to satisfy the Nasdaq Capital Market Equity Standard by March 31, 2025, through fundraising and conversions.
• Reverse Stock Split: A 1-for-100 reverse stock split of its authorized and outstanding common stock became effective on January 24, 2025.

Geographic Footprint: Conduit's principal executive offices are located in Naples, Florida, U.S. The Company leases laboratory space at Cambridge Science Park, UK, effective March 7, 2024. AstraZeneca conducted initial pre-clinical and clinical trials for AZD1656, with 19 Phase I studies in the U.S. Conduit's IP portfolio includes granted patents in numerous international jurisdictions, including 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, and Australia.

Financial Performance

Conduit Pharmaceuticals Inc. is in the research and development phase and does not generate revenue from product sales. Its business model anticipates monetization through licensing agreements after Phase II clinical trials.

Revenue Analysis

Profitability Metrics:

• Gross Margin: N/A
• Operating Margin: N/A (Operating Loss)
• Net Margin: N/A (Net Loss)

Investment in Growth:

• R&D Expenditure: $3.4 million (2024), representing a 3,653% increase from $0.1 million in 2023. This constituted 22.0% of total operating costs and expenses in 2024.
• Capital Expenditures: Net cash used in investing activities was $(43) thousand in 2024. Property, plant and equipment primarily consisted of leasehold improvements.
• Strategic Investments:
  • AstraZeneca License Agreement: $3.1 million (upfront payment of $1.5 million cash and $1.6 million in common shares) in 2024.
  • SARBORG Limited Service Agreement: $0.4 million (initial cash payment of $0.2 million and $0.2 million in common stock) in 2024.

Business Segment Analysis

Conduit Pharmaceuticals Inc. operates as a single reportable segment focused on the research and development of clinical assets. The Chief Executive Officer, as the Chief Operating Decision Maker (CODM), manages operations and allocates resources based on consolidated net loss.

Research & Development Segment

Financial Performance (in thousands):

• Research & development expense – new licenses: $3,114 (2024)
• Research & development expense – clinical asset development: $264 (2024)
• Total R&D Expense: $3,378 (2024) vs. $90 (2023) (+3653% YoY)
• Operating Loss: $(15,419) (2024) vs. $(5,262) (2023)

Key Growth Drivers:

• Asset Licensing: Acquisition of new clinical assets, such as the license agreement with AstraZeneca for AZD1656, AZD5658, and AZD5904.
• IP Development: Development of proprietary solid-form intellectual property, including co-crystals of AZD1656, to extend patent life and enhance drug characteristics.
• Clinical Advancement: Progression of licensed and proprietary assets through Phase II clinical trials.
• AI Integration: Utilization of SARBORG Limited's advanced AI and cybernetics platform for drug repurposing, discovery, solid-form identification, and clinical trial monitoring to improve efficiency and accelerate timelines.

Product Portfolio:

• AZD1656 (HK-4 Glucokinase Activator):
  • Primary Focus: Lupus & ANCA Vasculitis (Phase II ready).
  • Other Potential Indications: Covid-19, Long Covid (Phase I ready, though Conduit does not intend to further fund development for these indications), rheumatoid arthritis, multiple sclerosis, motor neuron disease, amyotrophic lateral sclerosis, psoriasis, Crohn’s disease, sarcoidosis, diabetic wound healing, idiopathic pulmonary fibrosis, and non-alcoholic steatohepatitis (via co-crystals).
• AZD5904 (Myeloperoxidase Inhibitor):
  • Primary Focus: Idiopathic Male Infertility (Phase II ready).
  • Other Potential Indications: Glioma.
• AZD5658 (HK-4 Glucokinase Activator):
  • Primary Focus: Further Autoimmune Disorders (Phase II ready).
  • Other Potential Indications: Rheumatoid arthritis, multiple sclerosis, motor neuron disease, and amyotrophic lateral sclerosis.

Market Dynamics:

• Conduit focuses on disorders with unmet medical needs or significant side effects from existing treatments, including orphan diseases like Lupus Nephritis and ANCA Vasculitis, and conditions like Idiopathic Male Infertility. The Company's strategy is to monetize these clinical assets after Phase II through licensing to larger pharmaceutical companies.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed in the filing.
• Dividend Payments: Conduit has never declared or paid cash dividends and does not intend to for the foreseeable future.
• Dividend Yield: N/A
• Future Capital Return Commitments: No specific programs or amounts for future capital returns were disclosed.

Balance Sheet Position (in thousands):

Total Debt (as of December 31, 2024, in thousands):

• Convertible promissory note payable: $800
• Convertible promissory notes payable at fair value: $2,985
• Convertible promissory notes payable at fair value – related parties: $2,871
• Notes payable: $150
• Notes payable – related parties: $425
• Total Debt: $7,231

Net Cash Position: $(6,677) thousand (Cash and Equivalents $554 thousand - Total Debt $7,231 thousand) as of December 31, 2024.

• Credit Rating: Not disclosed.
• Debt Maturity Profile:
  • Convertible Promissory Note ($0.8 million principal): Matured December 19, 2024, and was in default. Subsequently settled for $0.7 million on March 6, 2025, and repaid on March 13, 2025.
  • A.G.P. Convertible Note ($5.7 million principal): Due November 25, 2025, bearing 5.5% interest.
  • August 2024 Nirland Note ($2.6 million principal and accrued interest outstanding as of December 31, 2024): Substantially converted into common stock and repaid by February 13, 2025.
  • October 2024 Nirland Note ($0.6 million principal): Due October 31, 2025, bearing 12% interest. Fully repaid by February 7, 2025.
  • Loans Payable ($0.2 million aggregate principal): Matured December 19, 2024, and were in default. Repaid in full in February 2025.

Cash Flow Generation (in thousands):

• Operating Cash Flow: $(9,682) (2024) vs. $(7,725) (2023)
• Free Cash Flow: Not explicitly stated or calculable from provided data. Net cash used in investing activities was $(43) thousand in 2024.
• Cash Conversion Metrics: Not disclosed.

Operational Excellence

Production & Service Model:

• Manufacturing Approach: Conduit does not own or operate manufacturing facilities. The Company relies entirely on third parties to manufacture, store, and test its clinical assets, including material originally manufactured by AstraZeneca.
• Service Delivery Methods: Conduit collaborates with external Contract Research Organizations (CROs) and Key Opinion Leaders (KOLs) to manage, fund, and oversee its clinical trials. This approach aims to facilitate efficient development through Phase II trials.

Supply Chain Architecture: Key Suppliers & Partners:

• Active Pharmaceutical Ingredients (APIs): AstraZeneca - provided initial APIs for the licensed assets (AZD1656, AZD5658, AZD5904).
• Clinical Trial Management: External Contract Research Organizations (CROs) - manage and oversee clinical trials.
• Research & Development: Third-party CROs and internal Cambridge laboratory facility - conduct R&D activities, including co-crystal development.
• Technology Partners: SARBORG Limited - provides an advanced AI and cybernetics platform for drug repurposing, discovery, solid-form identification, and clinical trial monitoring.

Facility Network:

• Manufacturing: No owned manufacturing facilities; relies on third-party contract manufacturers.
• Research & Development: Leased laboratory space at Cambridge Science Park, UK, under a lease effective March 7, 2024, running until January 2027.
• Distribution: Conduit has no internal marketing, sales, or distribution capabilities and anticipates relying on licensing, co-sale, co-promotion, and distribution agreements with strategic partners for commercialization.

Operational Metrics:

• Specific operational metrics such as capacity utilization, efficiency measures, or quality indicators were not disclosed in the filing.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Licensing Agreements: Conduit's primary go-to-market strategy is to monetize clinical assets after successful Phase II trials through licensing agreements with large biotech or pharmaceutical companies. This involves securing upfront milestone payments and royalty income streams.
• Channel Partners: The Company anticipates relying on co-sale, co-promotion, and distribution agreements with strategic partners for the commercialization of its products, as it has no internal marketing, sales, or distribution capabilities.
• Digital Platforms: Not explicitly mentioned as a distribution channel.

Customer Portfolio: Enterprise Customers:

• Strategic Partnerships: AstraZeneca serves as a key licensor of Conduit's initial pipeline assets (AZD1656, AZD5658, AZD5904).
• Future Strategic Partners: Conduit's customer portfolio will primarily consist of large biotech or pharmaceutical companies that will license its clinical assets for further development and commercialization post-Phase II.
• Customer Concentration: The business model inherently involves a high dependency on securing licensing agreements with a limited number of large pharmaceutical partners for commercialization, which could present concentration risk.

Geographic Revenue Distribution:

• Not applicable, as Conduit Pharmaceuticals Inc. is currently a pre-revenue company focused on research and development.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Conduit operates within the highly competitive pharmaceutical and biotechnology industry, characterized by significant R&D investment, lengthy development timelines, and stringent regulatory requirements. The global biotechnology market was valued at $1.68 trillion in 2024 and is projected to grow at a CAGR of 9.18% from 2024 to 2033. The global pharmaceutical market is forecast to grow an annualized 3.2% to $1.3 trillion over the next five years. Key therapeutic areas targeted by Conduit, such as Lupus Nephritis, ANCA Vasculitis, and Idiopathic Male Infertility, are experiencing robust growth, with projected CAGRs of 10.3%, 4.22%, and 3.54% respectively, over the next several years.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing acknowledges that Conduit operates in a highly competitive industry with numerous pharmaceutical and biotechnology companies. While specific direct competitors are not named, the competitive landscape includes companies developing treatments for autoimmune disorders (Lupus, ANCA Vasculitis) and male infertility.

Emerging Competitive Threats: The industry is subject to new entrants, disruptive technologies, and the development of alternative solutions by existing players. Conduit's strategy of focusing on deprioritized assets and leveraging AI aims to mitigate some of these threats.

Competitive Response Strategy: Conduit's approach to maintaining competitive advantage involves:

• Asset Repurposing: Identifying and developing deprioritized assets from larger pharmaceutical companies.
• IP Extension: Utilizing solid-form technology to extend the patent life of its assets.
• Efficiency through AI: Employing AI and cybernetics to streamline drug discovery, repurposing, and clinical trial monitoring.
• Focused Development: Efficiently advancing clinical assets through Phase II trials to attract licensing partners.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Drug Development Uncertainty: Preclinical and clinical drug development for AZD1656 and AZD5904 is inherently expensive, time-consuming, and uncertain, with a high risk of failure. The novel technology of AZD1656 makes predicting development time and cost particularly difficult.
• Market Acceptance: There is no guarantee that products developed from Conduit's clinical assets will achieve commercial success or market acceptance, even if successfully licensed.
• Customer Concentration: The business model relies on securing licensing agreements with a limited number of large biotech or pharmaceutical companies, creating potential concentration risk.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Third-Party Reliance: Conduit is heavily reliant on third-party Contract Research Organizations (CROs) for conducting clinical trials and product development, and on third-party manufacturers for the supply of Active Pharmaceutical Ingredients (APIs) and other clinical assets. This reliance introduces risks related to quality control, timely delivery, and cost management.
• Manufacturing Complexity: The manufacturing and supply of APIs and other substances are complex and challenging, potentially leading to delays or increased costs.

Intellectual Property Risks:

• Patent Entitlement Proceedings: Conduit UK Management Limited is involved in patent entitlement proceedings initiated by St George Street Capital concerning the AZD1656 co-crystal patent application (PCT/IB2022/00775). The outcome of this dispute could impact the Company's ownership and commercialization rights.
• IP Protection: The Company's ability to obtain, maintain, and enforce patent protection for its products and technologies is critical and subject to various challenges, including the risk of invalidation or infringement by third parties.
• AI Technology Reliance: Reliance on SARBORG Limited's AI technology, a related party, introduces potential risks regarding the effectiveness, security, and continuous availability of the platform.

Financial & Regulatory Risks

Market & Financial Risks:

• Going Concern Doubt: Conduit incurred net losses of $17.8 million for the year ended December 31, 2024, and has an accumulated deficit of $29.1 million. Management has concluded there is substantial doubt about the Company’s ability to continue as a going concern, necessitating substantial additional funding.
• Nasdaq Delisting Risk: The Company received a Nasdaq delisting notice and is working to regain compliance with Nasdaq listing rules, including the market value of publicly held shares and stockholders' equity, by March 31, 2025. Failure to comply could result in delisting.
• Capital Requirements: Conduit will require substantial additional funding in the future, which may not be available on acceptable terms or at all.
• Warrant Exercise Price: The exercise prices of the Company’s warrants are significantly greater than the current market price of its common stock, reducing the likelihood of their exercise and thus a potential source of capital.

Regulatory & Compliance Risks:

• Healthcare Laws: Conduit is subject to various U.S. healthcare laws and regulations, including state security breach notification laws, state health/personal information privacy laws, and federal/state consumer protection laws.
• Inflation Reduction Act of 2022 (IRA): The IRA impacts drug prices, requiring rebates for price increases faster than inflation and allowing CMS to negotiate drug prices, which could affect future licensing revenue.
• Data Privacy: Compliance with the EU General Data Protection Regulation (GDPR), UK GDPR, and the Cayman Islands Data Protection Act, as well as U.S. state laws, imposes compliance requirements and potential costs.

Geopolitical & External Risks

• Geographic Dependencies: While not explicitly detailed, operations in the U.S. and UK, and international patent filings, expose the Company to varying geopolitical and economic conditions.
• Trade Relations: Changes in international trade relations or policies could impact the Company's ability to conduct R&D or license assets globally.
• Sanctions & Export Controls: Compliance with U.S. Foreign Corrupt Practices Act (FCPA) and U.K. Bribery Act of 2010, as well as other potential export controls, could limit business activities.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• HK-4 Glucokinase Activators: Investment in developing AZD1656 and AZD5658 for autoimmune disorders such as Lupus, ANCA Vasculitis, rheumatoid arthritis, multiple sclerosis, motor neuron disease, and amyotrophic lateral sclerosis.
• Myeloperoxidase Inhibitors: Development of AZD5904 for idiopathic male infertility, with potential exploration for glioma.
• Solid-Form Technology: Strategic importance is placed on developing proprietary solid-form intellectual property, such as co-crystals of AZD1656, to extend patent life and potentially improve drug characteristics. This is a key competitive position.
• Artificial Intelligence & Cybernetics: Leveraging an advanced AI and cybernetics platform through a collaboration with SARBORG Limited. This technology is strategically important for drug repurposing, discovery, solid-form identification, and clinical trial monitoring, aiming to enhance efficiency, lower costs, and accelerate timelines.

Innovation Pipeline:

• AZD1656: Initial development plan includes a Phase II clinical trial for Lupus (including Lupus Nephritis) and ANCA Vasculitis.
• AZD5904: A Phase Ib "proof of mechanism" trial is planned to verify MPO inhibition in semen, followed by a Phase II trial for Idiopathic Male Infertility.
• AZD5658: Currently Phase II ready for further autoimmune disorders.
• Future Initiatives: Conduit intends to pursue additional licensing relationships for deprioritized assets, focusing on disorders with unmet medical needs.

Intellectual Property Portfolio:

• Patent Strategy: Conduit holds exclusive development rights for AZD1656, AZD5658, and AZD5904 through its License Agreement with AstraZeneca. The Company also owns IP and development rights for AZD1656 co-crystals. The strategy is to extend patent life through solid-form technology.
• Patent Holdings:
  • AZD1656 Composition of Matter Patent: Granted in multiple international jurisdictions, expires July 3, 2026.
  • AZD1656 Polymorph Patent: Granted in China and United States, expires February 2030.
  • AZD1656 Co-crystal PCT/IB2022/00075: Owned by Conduit Pharmaceuticals, filed September 2, 2022. If granted, will expire September 2, 2042.
  • AZD1656 Co-crystal JP2022-176753: Owned by Conduit Pharmaceuticals, granted in Japan, expires November 2, 2042.
  • AZD5904 Use Patent: Licensed from AstraZeneca, international description, expires July 12, 2038.
  • AZD5658 Composition of Matter Patent: Licensed from AstraZeneca, granted in multiple international jurisdictions, expires July 3, 2026.
• IP Litigation: Conduit is currently involved in patent entitlement proceedings initiated by St George Street Capital regarding the AZD1656 co-crystal patent application PCT/IB2022/00775, which Conduit refutes.

Technology Partnerships:

• Strategic Alliances: SARBORG Limited - a related party, provides an advanced AI and cybernetics platform under a services agreement. This collaboration is central to Conduit's strategy for drug repurposing and development efficiency.

Leadership & Governance

Executive Leadership Team (as of March 28, 2025)

Leadership Continuity: Employment agreements for the CEO and Interim CFO include severance and change in control provisions, which may contribute to leadership stability. Dr. Tapolczay's base salary increased by 3% and Mr. Bligh's by £60,000 in 2024.

Board Composition:

• Total Directors: The Board consists of 7 directors as of March 28, 2025.
• Independence: All directors except James Bligh, David Tapolczay, and Andrew Regan are considered independent.
• Committee Structure:
  • Audit Committee: Chele Chiavacci Farley (Chairperson), Dr. Freda Lewis-Hall, Simon Fry. Ms. Farley and Mr. Fry are designated "audit committee financial experts."
  • Compensation Committee: Faith L. Charles (Chairperson), Chele Chiavacci Farley, Simon Fry.
  • Nominating and Governance Committee: Dr. Freda Lewis-Hall (Chairperson), Faith L. Charles.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 31, 2024, Conduit had six full-time employees.
• Geographic Distribution: Not explicitly detailed, but operations span executive offices in the U.S. and a laboratory facility in the UK.
• Skill Mix: The small employee base suggests a highly specialized team focused on R&D, clinical development oversight, and strategic management, complemented by external CROs and experts.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Not explicitly detailed in the filing.
• Retention Metrics: Specific turnover rates or retention metrics were not disclosed.
• Employee Value Proposition: Compensation includes base salaries, potential annual bonuses (e.g., CEO target 50% of base salary, Interim CFO up to 40%), and equity awards (stock options, restricted stock).

Diversity & Development:

• Diversity Metrics: Specific diversity metrics across key demographics were not disclosed.
• Development Programs: Formal development programs or career advancement initiatives were not explicitly detailed.
• Culture & Engagement: Not explicitly detailed in the filing.

Environmental & Social Impact

Environmental Commitments:

• EHS Regulation: Conduit is subject to environmental, health, and safety laws and regulations relevant to its operations.
• Climate Strategy: Specific climate strategy, emissions targets, carbon neutrality commitments, or renewable energy adoption strategies were not explicitly detailed in the filing.
• Supply Chain Sustainability: Specific supplier engagement programs or responsible sourcing initiatives were not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Specific philanthropic programs or local community support initiatives were not explicitly detailed.
• Product Impact: Conduit's core business model focuses on developing new treatments for disorders with unmet medical needs or significant side effects from existing treatments, such as orphan diseases (Lupus Nephritis, ANCA Vasculitis) and idiopathic male infertility, which inherently aims to provide social benefit.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The filing does not explicitly mention any seasonal trends or quarterly performance patterns affecting Conduit's business.
• Economic Sensitivity: The pharmaceutical and biotechnology industry can be influenced by broader economic conditions and healthcare spending trends. However, specific economic sensitivity or recession resilience for Conduit's pre-revenue, R&D-focused business model was not detailed.
• Industry Cycles: The Company's focus on drug development means its success is tied to the long and often unpredictable cycles of clinical trials and regulatory approvals, rather than short-term demand fluctuations.

Planning & Forecasting:

• Specific details on demand forecasting approaches, inventory management, or capacity planning were not disclosed in the filing, which is typical for a pre-revenue R&D company.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Product Approval: Conduit does not intend to continue development of clinical assets beyond Phase II clinical trials or seek marketing approval from the FDA or similar organizations. Its strategy is to monetize assets through licensing after Phase II.
• U.S. Healthcare Laws: The Company is subject to various U.S. healthcare laws and regulations, including state security breach notification laws, state health/personal information privacy laws, and federal/state consumer protection laws.
• International Compliance: Conduit is subject to the EU General Data Protection Regulation (GDPR), UK GDPR, and the Cayman Islands Data Protection Act due to its international operations and data processing activities.
• Inflation Reduction Act of 2022 (IRA): The IRA impacts drug prices by requiring rebates for price increases faster than inflation (starting 2023) and allowing CMS to negotiate drug prices (starting 2026 for Part D, 2028 for Part B). These provisions could affect the future commercial value of licensed assets.

Trade & Export Controls:

• Anti-bribery Regulations: Conduit is subject to the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act of 2010, requiring compliance with anti-bribery and anti-corruption standards.
• Export Restrictions: Not explicitly detailed beyond general compliance with international trade laws.

Legal Proceedings:

• Strand Hanson Limited Claim: In August 2023, Conduit Pharmaceuticals Limited received a claim from Strand Hanson Limited for $2 million in advisory fees and 65 thousand shares of common stock. A claim was filed in the Business and Property Courts of England and Wales, with a trial scheduled for October 20, 2025. As of December 31, 2024, Conduit accrued an estimated liability of $0.4 million.
• St George Street Capital Patent Entitlement Proceedings: On December 18, 2024, Conduit UK Management Limited received notification from the UK Intellectual Property Office (UK IPO) that St George Street Capital initiated patent entitlement proceedings for patent application PCT/IB2022/00775, claiming Conduit was not the sole owner. Conduit refutes these claims and filed a counterstatement on February 26, 2025. Damages sought are unknown, and no loss contingency has been accrued as of December 31, 2024.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: Not explicitly stated, but the Company has significant net operating losses (NOLs) and a full valuation allowance against its deferred tax assets, indicating no current income tax benefit from these losses.
• Loss from operations before income taxes (in thousands): US $(12,855) (2024) and Foreign $(4,947) (2024).
• Deferred Tax Assets (in thousands): Consolidated deferred tax assets were $4,455 as of December 31, 2024, fully offset by a valuation allowance of $(4,455).
• NOL Carryforwards:
  • US federal NOLs: $8.5 million (2024), with indefinite carryforward, subject to an 80% taxable income offset limitation.
  • Foreign NOLs: $4.7 million (2024), with indefinite carryforward.
• Geographic Tax Planning: The presence of both US and foreign tax losses and NOLs indicates an international tax structure.
• Tax Reform Impact: The filing mentions the impact of the Inflation Reduction Act of 2022 on drug pricing, which could indirectly affect future taxable income from licensing revenues.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Conduit maintains insurance coverage, including prepaid directors’ and officers’ (D&O) insurance, with a balance of $1.2 million as of December 31, 2024. This coverage helps mitigate risks associated with executive and board liabilities.
• Risk Transfer Mechanisms: Beyond D&O insurance, specific risk transfer mechanisms such as hedging strategies or contractual risk allocation details were not explicitly disclosed in the filing. The reliance on third-party CROs and manufacturers implies contractual agreements that likely include indemnification and liability clauses to transfer certain operational risks.