Conduit Pharmaceuticals Inc. (CDT) is a multi-asset, clinical-stage, disease-agnostic life science company that has developed a unique business model to efficiently bring clinical assets from pharmaceutical companies and develop new treatments for patients. The company's novel approach addresses unmet medical needs and extends the intellectual property for its existing assets through cutting-edge solid-form technology, with the expectation of commercializing these products with life science companies.

Conduit's Origins and Growth Journey

Conduit Pharmaceuticals was founded in 2021 with the specific purpose of facilitating the development and commercialization of clinical assets. The company's unique business model allows it to act as a conduit, bringing clinical assets from pharmaceutical companies and developing new treatments for patients. This approach has positioned Conduit as an innovative player in the pharmaceutical industry.

In September 2023, Conduit Pharmaceuticals took a significant step forward by completing a merger transaction with Murphy Canyon Acquisition Corp. (MURF). This merger resulted in Conduit becoming a publicly traded company on the Nasdaq stock exchange under the ticker symbol CDT. The transaction provided Conduit with additional capital to advance its clinical programs, strengthening its financial position and market presence.

Prior to the merger, in November 2022, Conduit Pharmaceuticals demonstrated its commitment to securing funding for its operations by approving a master Convertible Loan Note Instrument. This instrument permitted the company to issue convertible notes payable for up to $3.3 million. Throughout 2023, Conduit utilized this facility, issuing convertible notes to fund its ongoing operations and research initiatives.

Expansion Through Strategic Licensing Agreements

In August 2024, Conduit took a significant step forward by entering into an exclusive license agreement with AstraZeneca. Through this agreement, Conduit acquired the rights to develop and commercialize AZD1656 and AZD5658, two HK-4 glucokinase activators, as well as AZD5904, a myeloperoxidase inhibitor (MPO), all of which had shown favorable preclinical and Phase I data under AstraZeneca's stewardship.

The licensing agreement with AstraZeneca has provided Conduit with a strong foundation to accelerate the development of these assets. Leveraging the safety data generated in AstraZeneca's previous clinical trials, Conduit plans to initiate Phase II clinical trials for AZD1656 to evaluate its potential in treating systemic lupus erythematosus and ANCA-associated vasculitis, two autoimmune disorders with significant unmet medical needs.

Strengthening Intellectual Property and Competitive Position

Conduit's commitment to maximizing the value of its assets is further demonstrated by its successful pursuit of patent protection. In July 2024, the company announced the approval of a composition of matter patent application by IP Australia for its lead asset, the HK-4 Glucokinase Activator. This patent approval not only validates the strength of Conduit's internal R&D capabilities but also significantly strengthens the company's position for future out-licensing opportunities.

Furthermore, Conduit has filed two new patent applications related to AZD1656, including a novel composition of matter filing for CDT1656, a new addition to the company's autoimmune pipeline. CDT1656 combines AZD1656 with a second compound whose mechanism of action plays a critical role in the progression of autoimmune disorders, potentially expanding the market opportunity for Conduit's autoimmune portfolio.

Leveraging Artificial Intelligence and Cybernetics

Recognizing the potential of advanced technologies to revolutionize drug development, Conduit recently announced a strategic collaboration with Sarborg Limited, an AI and cybernetics company. This partnership aims to integrate an advanced artificial intelligence and cybernetics platform into Conduit's operations, with the goal of reducing human error, cutting costs, and improving efficiency across its current and future portfolio.

The first phase of this collaboration has been successfully completed, paving the way for the transition to Phase II, which will focus on developing personalized software dashboards to enhance the decision-making and operational agility of Conduit's team. This innovative approach positions the company at the forefront of leveraging AI and cybernetics to drive drug development forward.

Conduit's Financial Performance and Liquidity

Conduit Pharmaceuticals' financial performance has been marked by significant investments in research and development, which have totaled $3.25 million for the nine months ended September 30, 2024. The company's general and administrative expenses for the same period amounted to $8.66 million, reflecting the ongoing costs associated with operating as a public company and advancing its clinical assets.

As of September 30, 2024, Conduit had cash and cash equivalents, net of bank overdrafts and short-term investments, of $34,000. The company's current ratio stood at 1.92, and its quick ratio was 1.37, indicating a healthy liquidity position. However, Conduit has determined that additional financing will be required to fund its operations for the next 12 months, and its ability to continue as a going concern is dependent upon obtaining additional capital and financing.

The company's research and development expenses for the three months ended September 30, 2024, were $3.09 million, primarily driven by the upfront payment of $1.50 million and the $1.60 million in shares issued to AstraZeneca in connection with the license agreement signed in August 2024. This agreement granted Conduit rights to develop and commercialize certain HK-4 Glucokinase activators and a myeloperoxidase inhibitor from AstraZeneca.

General and administrative expenses increased significantly year-over-year, rising from $0.43 million in the three months ended September 30, 2023, to $2.72 million in the same period of 2024. For the nine-month periods, these expenses grew from $2.83 million in 2023 to $8.66 million in 2024. The increase was driven by higher salaries and stock-based compensation, insurance costs related to directors and officers coverage, as well as increases in professional fees, advertising/marketing, and other administrative expenses associated with operating as a public company.

Conduit reported net other expense of $0.65 million and $3.49 million for the three and nine months ended September 30, 2024, respectively. This included a $0.40 million contingent liability accrual, $2.71 million in expenses related to the issuance of warrants in exchange for shareholder lock-up agreements, and increased interest expense on convertible notes, promissory notes, and deferred commission payables.

On October 29, 2024, Conduit entered into a $600,000 bridge loan agreement with A.G.P., providing additional short-term liquidity to support its operations.

Challenges and Regulatory Hurdles

Conduit Pharmaceuticals' journey has not been without its challenges. The company has faced regulatory hurdles, including receiving notices from Nasdaq regarding its failure to maintain compliance with the Minimum Bid Price, Market Value of Publicly Held Shares, and Market Value of Listed Securities requirements. The company is currently working to regain compliance within the specified timeframes.

Furthermore, in August 2023, prior to the completion of the merger with MURF, Conduit's wholly-owned subsidiary, Conduit Pharmaceuticals Limited, received a claim from Strand Hanson Limited, an advisory firm, regarding unpaid fees. Conduit has disputed the claim and accrued an estimated liability of $0.4 million in its financial statements as of September 30, 2024.

Despite these obstacles, Conduit remains committed to its mission of developing innovative treatments and leveraging advanced technologies to drive drug development forward. The company's partnerships, patent approvals, and continued focus on its clinical pipeline demonstrate its resilience and dedication to creating value for its shareholders.

Conclusion

Conduit Pharmaceuticals Inc. (CDT) has positioned itself as a unique player in the pharmaceutical industry, leveraging its innovative business model and strategic partnerships to advance its clinical assets and strengthen its intellectual property portfolio. The company's recent exclusive licensing agreement with AstraZeneca, combined with its pursuit of patent protection and its exploration of AI-driven drug development, have positioned Conduit for potential success in the years to come. While the company faces regulatory challenges and the need for additional financing, its experienced leadership team and commitment to addressing unmet medical needs suggest a promising future for Conduit Pharmaceuticals.

Conduit's financial results reflect its transition to operating as a public company, with substantial investments in research and development of its licensed assets from AstraZeneca as well as increases in general and administrative costs to support the company's growth. The primary focus has been on advancing the development of the AZD1656 compound through co-crystal formulation work. As Conduit continues to navigate the challenges of drug development and regulatory compliance, securing additional financing will be crucial to fund its ongoing operations and clinical development activities.