UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File No. 001-41245
CONDUIT
PHARMACEUTICALS INC.
(Exact
name of registrant as specified in its charter)
4995 Murphy Canyon Road, Suite 300 San Diego, California 92123
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code:
760-471-8536
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, par value $0.0001 per share CDT The Nasdaq Stock Market LLC
Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
No☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☒
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As
of April 16, 2024, there were there were 73,829,536shares of common stock, $0.0001 par value, of
the Company issued and outstanding. The aggregate market value of the common stock held by non-affiliates of the registrant as of June
30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, was $23,222,860based upon the closing price reported for such
date on The Nasdaq Global Market.
TABLE
OF CONTENTS
PART I
Item 1. Business 1
Item 1A. Risk Factors 33
Item 1B. Unresolved Staff Comments 62
Item IC. Cybersecurity 62
Item 2. Properties 62
Item 3. Legal Proceedings 62
Item 4. Mine Safety Disclosures 62
PART II
Item 6. Reserved 63
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 75
Item 8. Financial Statements and Supplementary Data 75
Item 9A. Controls and Procedures 75
Item 9B. Other Information 75
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 75
PART III
Item 10. Directors, Executive Officers and Corporate Governance 75
Item 11. Executive Compensation 83
Item 14. Principal Accountant Fees and Services 95
PART IV
Item 15. Exhibits and Financial Statement Schedules 96
Signatures. 99
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 risk of disruption to our current plans and operations;
● costs related to our business;
● changes in applicable laws or regulations;
● our ability to maintain existing license agreements;
● our ability to achieve and maintain profitability in the future;
● our financial performance; and
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 TM 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
Risks
Related to Intellectual Property
Risks
Related to Securities Markets and Investment in Our Stock
Risks
Related to Finances and Capital Requirements
iii
PART
I
Item
1. Business
Overview
On
September 22, 2023, a merger transaction 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 merger as a wholly-owned subsidiary of MURF, and (ii) MURF changed its name from Murphy Canyon Acquisition Corp. to Conduit Pharmaceuticals
Inc. (hereafter referred to, collectively with is subsidiaries as “Conduit”, the “Company”,
“we”, “us” or “our”, unless the context otherwise requires). The common stock of the Company
commenced trading on The Nasdaq Global Market under the symbol “CDT” on September 25, 2023, and the Company’s warrants
commenced trading on The Nasdaq Capital Market under the symbol “CDTTW” on September 25, 2023.
Conduit
has developed a unique business model that allows it to act as a conduit to bring clinical assets from pharmaceutical companies and
develop new treatments for patients. Our novel approach addresses unmet medical needs and lengthens the intellectual property for our
existing assets through cutting-edge solid-form technology and then commercializing these products with life science
companies.
We
are led by highly experienced pharmaceutical executives: Dr. Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair
of our Board of Directors, and Dr. David Tapolczay, former Chief Executive Officer of the United Kingdom-based medical research charity
LifeArc, our Chief Executive Officer. Our management team includes active senior clinicians who have an extensive understanding of the
pharmaceuticals market, which supports our strategy of developing clinical assets in a cost-efficient manner while focusing on therapeutic
efficacy and patient safety.
We believe that we can leverage 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 a 20-year patent pending solid-form compound, the AZD1656 Cocrystal (a HK-4 Glucokinase Activator), targeting a wide
range of autoimmune diseases. 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.
In
connection with the funding and development of clinical assets, we evaluate and select the specific molecules to be developed and collaborate
with external contract research organizations (“CROs”) and Key Opinion Leaders (“KOLs”) to run clinical trials
that are managed, funded, and overseen by us. We intend to leverage our comprehensive clinical and scientific expertise in order to facilitate
development of clinical assets through Phase II trials in an efficient manner by using CROs and third-party service providers. We will
also collaborate closely with disease specific KOLs to collectively assess and determine the most appropriate indications for all our
current and forthcoming assets.
We
believe that successful Phase II trials of the clinical assets in our pipeline will increase the value of our assets. There is no assurance
that any clinical trials on the assets owned or licensed by us will be successful, however, following a successful Phase II 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.
Outside
of our proprietary owned patented clinical assets, we have an exclusive relationship and partnership with St George Street Capital
(“St George Street”), a biomedical charity based in the United Kingdom. We have the option to fund 100% of the
development of clinical assets that were initially licensed to St George Street by AstraZeneca PLC (AZN.L)
(“AstraZeneca”). AstraZeneca has conducted initial pre-clinical and, in some instances, clinical trials on these assets,
but has decided to license them for further development. At present, the Company has not definitely determined whether to fund any of projects through St George Street,
although its ability to choose to remains at the present time. Subject to the terms of the Global Funding Agreement and the project funding
agreements (described in further detail below), either we or St George Street may seek funding for projects from third parties.
In
addition to our patent pending solid-form compound targeting a wide range of autoimmune diseases, two assets which were licensed from
AstraZeneca to St George Street that may be developed by us include AZD5904 (a Myeloperoxidase Inhibitor) targeting idiopathic male
infertility and AZD1656 (a Glucokinase Activator) targeting autoimmune diseases or immunodeficient conditions including uveitis, premature
labor, renal transplant rejection, and Hashimoto’s thyroiditis.
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 for which indications. Through this relationship,
there are considerable active pharmaceutical ingredients (“APIs”) that were manufactured by AstraZeneca in conducting its clinical
trials available. As a result, Conduit does not have to develop the API, which is often a time consuming and expensive process, and the
API already produced was subject to rigorous quality control measures.
Furthermore,
Conduit is well positioned, and intends, to pursue additional relationships and/or partnerships with third parties for the licensing
of further assets which are currently deprioritized. We plan to focus our efforts on developing clinical assets to address diseases that
impact a large population where there is no present treatment or the present treatment, carries significant unwanted side effects.
Our
Initial Pipeline: HK-4 Glucokinase Activator Cocrystal, AZD1656 and AZD5904
We
wholly own the intellectual property and the rights to further develop the solid-form patent pending Cocrystals of AZD1656 (AZD1656 Cocrystal
WO2023084313 - Patent Expires 02/09/2042) which we intend to target a wide range of autoimmune diseases.
Through
our agreements, we have the exclusive rights to fund the development of clinical assets, AZD1656 and AZD5904, which are licensed to St
George Street by AstraZeneca, in five indications.
AZD1656
has undergone testing in a total of 20 Phase I clinical trials and five Phase II clinical trials conducted by AstraZeneca since 2008
and 19 of which were conducted in the U.S. Additional information about those clinical trials is available at the U.S. National Library
of Medicine’s website at www.clinicaltrials.gov (however, the information contained on or otherwise accessible through such website
is not part of this Annual Report).
AZD5904
has undergone testing in five Phase I clinical trials conducted by AstraZeneca, one of which was conducted in the U.S. While a significant
amount of clinical trial data has already been generated for both AZD1656 and AZD5904, some of this data was generated outside of the
U.S. and accordingly may not be accepted by the FDA. In the event that such data is not accepted by the FDA, additional clinical trials
may be required, which would result in additional costs and time to develop these clinical assets.
Asset
Development
Our
initial development plan is to conduct a Phase II clinical trial on the selected AZD1656 Cocrystal (which we wholly own the intellectual
property rights to), that we believe has the potential to treat a wide range of autoimmune diseases. Should we choose to develop AZD1656
or AZD5904, that development would be subject to the terms of the Global Funding Agreement, described in more detail below. We anticipate
developing our Initial Pipeline (which has already undergone pre-clinical and clinical trials) through the Phase II stage and then monetizing
such clinical assets through a license, royalty, or other transaction at this stage. At this time, 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.
To
enable us to monetize our clinical assets, we, in partnership with CROs and KOLs, intend to conduct additional clinical trials on our
clinical assets in order to generate clinical data to support the further development of our clinical assets beyond the Phase II stage.
In the event successful clinical trial data is generated for a clinical 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 Phase III clinical trials. There is no assurance that any clinical trials on the assets owned or licensed by
us will be successful.
We
intend to use the income received from licensing clinical assets in our pipeline to fund the development of additional clinical assets,
which will allow us to use the existing income stream from clinical assets that have been licensed to fund our on-going operations, including
the development and commercialization of additional clinical assets, without having to rely solely on debt and/or equity financing.
Our
Development Strategy
Our
strategy is to generate value through the development of new medicines, or clinical assets, for patients where our research indicates
that there are not effective pharmaceutical treatments available or such existing pharmaceutical treatments are not adequate due to,
among other things, cost of such pharmaceuticals and side effects. We are working to develop new medicines in diseases where competitive
treatments carry a high incidence of unacceptable side effects resulting in tolerability and compliance issues. We aim to extend and
develop solid-form intellectual property on assets which are licensed from pharmaceutical companies or generated within our facility
in Cambridge, UK. We believe that our Cambridge facility positions us at the nexus of scientific advancement, providing an environment
to drive cutting-edge research and development initiatives.
There
is evidence that promising solid-form candidates can supersede original pharmaceutical products. We are currently in the process of developing
new solid-form intellectual property on clinical assets which we believe will serve as promising alternatives for existing products on
the market. We believe that our expertise and utilization of solid-form technology can potentially enhance the efficacy, bioavailability,
solubility and delivery of existing products on the market. Once a candidate has been identified and patented, we will fund and conduct
clinical trials through CROs.
As
previously indicated, our strategy also involves establishing strategic collaborations with globally recognized KOLs. We will
collaborate closely with disease specific KOLs to collectively assess and determine the most appropriate indications for all our
current and forthcoming assets. This approach ensures that the selection of indications aligns with the KOLs’ insights, in
addition to our internal expertise, optimizing the development and success of Conduit’s diverse portfolio.
Our
unique relationships allow us to bypass certain traditional hurdles for the development of clinical assets. Through relationships with
St George Street, and we anticipate, subsequently with AstraZeneca, our Initial Pipeline has already undergone initial pre-clinical,
and, in some instances, clinical testing conducted by AstraZeneca, this enables us to use the safety data generated in the prior trials
in order to assess which assets to continue to develop. We regularly assess our asset portfolio to identify potential risks and take
steps to mitigate those risks, such as the repurposing of assets, which reduces development costs and timelines, as the clinical asset
has already undergone safety and toxicity testing in humans, as well as extending the remaining patent life by up to 20 years on all
assets which are licensed.
The
prior preclinical and clinical studies conducted by AstraZeneca allow us to reduce the costs, expenses, and time in the development of
these assets by allowing us to continue the Phase Ib or Phase II stage, rather than the preclinical or Phase I stage, even if we are
investigating the assets for a new indication. For example, if a clinical asset was subject to a Phase I trial, such clinical asset may
be advanced to a Phase II trial even if the clinical asset is being investigated for a different indication. In addition, we have access
to API manufactured by AstraZeneca and as a result, should we use their formulation, we do not have to develop a route of manufacture
for the API, which is time consuming and expensive.
Strategic
Partnerships
Global
Funding Agreement – St George Street
We
and St George Street entered into an Exclusive Funding Agreement on March 26, 2021 (the “Global Funding Agreement”), pursuant
to which St George Street granted us the exclusive first right to provide to St George Street, or procure the provision of, all funding
for the performance of a drug discovery and/or development project in consideration for a share of the net revenue in respect of such
project.
We
and St George Street currently have entered into five project funding agreements, which are subject to the terms of the Global Funding
Agreement, to develop certain clinical assets that have been licensed to St George Street by AstraZeneca. The project funding agreements
relate to:
● AZD1656 for use in renal transplant,
● AZD1656 for use in pre-term labor,
● AZD1656 for use in Hashimoto’s thyroiditis,
● AZD1656 for use in uveitis, and
● AZD5904 for use in idiopathic male infertility.
At
present, the Company has not determined whether to fund any of these projects, although its ability to choose to remains at the present
time. Subject to the terms of the Global Funding Agreement and the project funding agreements, either we or St George Street may seek
funding for projects from third parties.
There
may be additional opportunities for us to partner with St George Street to fund the development of additional clinical assets in the
future, licensed from Astra Zeneca.
Should
we choose to fund these projects through St. George Street (“SGSC”), we are entitled to receive 100% of the Net Receipts (as defined in the
relevant project funding agreement) under each of the project funding agreements.
Pursuant
to its terms, the Global Funding Agreement remains effective in respect of each project until the expiration of the right of a party
to receive a share of the Net Revenue (as defined in the Global Funding Agreement) pursuant to the Global Funding Agreement. Under certain
circumstances, St George Street may terminate a project (i) in the event of a material or persistent breach of the Global Funding Agreement
by us, subject to a cure period if the breach is capable of remedy, or (ii) in the event St George Street decides to cease development
of a project. If an event of force majeure occurs and continues for a designated period of time, the innocent party may terminate the
Global Funding Agreement after a notice period.
Either
party may terminate a project if a voluntary arrangement is proposed or approved or an administration order is made, or a receiver or
administrative receiver is appointed of any of the other party’s assets or undertakings or a winding-up resolution or petition
is passed (otherwise than for the purpose of solvent reconstruction or amalgamation, in particular with respect to any reorganization
of the structure of that party) or if any circumstances arise which entitle a court or a creditor to appoint a receiver, administrative
receiver or administrator or make a winding-up order or similar or equivalent action is taken against or by that other party by reason
of its insolvency or in consequence of debt. Generally, each project funding agreement may be terminated by us if at any time St George
Street ceases the conduct of development or commercialization of the relevant products in accordance with the relevant development plan
for a designated period of time, provided that the termination is only effective with respect to the specified project and the Global
Funding Agreement continues in effect for all other projects. They may also be terminated by either party upon written notice to other
party if the other party materially breaches the project funding agreement and does not fully cure the breach to the non-breaching party’s
satisfaction within 90 days.
The
Global Funding Agreement also contains customary representations and warranties. Each party also agreed to keep secret and confidential
certain confidential information of the other party.
The
foregoing summary does not purport to be a complete description of all of the provisions of the Global Funding Agreement and related
project funding agreements and is qualified by reference to the full text of the Global Funding Agreement and the project funding agreements,
which are filed as exhibits to this Annual Report, and which are incorporated by reference in their entirety.
License
Agreement – St George Street and AstraZeneca
In
August 2019, St George Street entered into a license agreement with AstraZeneca (the “AZ License Agreement”), pursuant to
which AstraZeneca granted an exclusive worldwide license to St George Street, under certain AstraZeneca patents and know-how, to exploit
the pharmaceutical compounds known individually and together as AZD5904 (Myeloperoxidase Inhibitor) and AZD1656 (Glucokinase Activator).
The AZ License Agreement also included any additional compounds to be developed by St George Street and any product that is comprised
of or contains any such licensed compound pertaining to the field of idiopathic male infertility for the licensed compound AZD5904 and
in the field of renal transplant for the licensed compound for AZD1656.
Under
the AZ License Agreement, for a period of 60 days following AstraZeneca’s receipt of a proof of concept study for any licensed
compound, AstraZeneca retains an exclusive right of first negotiation to transfer all development, commercialization, or other ongoing
planned activities related to such licensed compound, to AstraZeneca or any of its affiliates, and to undertake future exploitation of
such licensed compound. Subject to the foregoing negotiation right, St George Street has the right and obligation to develop each licensed
compound at its sole cost and expense in accordance with the development plan set forth in the AZ License Agreement, and the right to
grant sublicenses to its affiliates and other persons with respect to each licensed compound. Any sublicense shall be consistent with,
and expressly made subject and subordinate to, the terms and conditions of the AZ License Agreement, and St George Street shall cause
each sublicensee to comply with the applicable terms and conditions of the AZ License Agreement. The development plan for each licensed
compound shall be managed by a joint coordination committee consisting of representatives from each party to the agreement.
St
George Street is required to pay AstraZeneca a share of any revenue payable to St George Street by any sublicensee according to the relevant
sublicense (the “Sublicense Revenue”), which shall be calculated based on the amounts payable to St George Street by the
sublicensee gross of tax, and shall include any upfront, milestone, or royalty payments payable. The percentage of Sublicense Revenue
payable to AstraZeneca is 60% for Sublicense Revenue that is less than $10 million; 50% for Sublicense Revenue that is equal to or greater
than $10 million but less than $15 million; and 40% for Sublicense Revenue that is equal to or greater than $15 million.
The
term of the AstraZeneca License Agreement commences on the effective date of that agreement and, unless earlier terminated in accordance
therewith, continues until the date of expiration of the last royalty term for the last licensed product. Following the expiration (but
not earlier termination) of the royalty term for a licensed product in a country, the license grant set forth in this agreement shall
become non-exclusive, fully-paid, and irrevocable for such licensed product.
The
AZ Agreement is terminable by either party if the other party is in material breach of the agreement, and such breach has not cured the
breach 90 days of notice (or 10 days of notice with respect to a payment breach).
AstraZeneca
may immediately terminate the agreement, including the rights of any sublicensees, upon written notice if St George Street or any of
its affiliates or sublicensees, anywhere in the territory, institutes, prosecutes or otherwise participates in any claim, demand, action
or cause of action for declaratory relief, damages or any other remedy or for an enjoinment, injunction or any other equitable remedy
alleging that any claim in an AstraZeneca patent is invalid, unenforceable or otherwise not patentable or would not be infringed by St
George Street’s activities absent the rights and licenses granted under the agreement. AstraZeneca may also terminate the agreement
upon 30 days’ prior written notice if St George Street ceases development of all licensed compounds and all licensed products and
a licensed product is not being commercialized in the territory by or on behalf of St George Street.
St.
George Street may terminate its activities under the agreement for convenience, on a project-by-project basis, upon reasonable notice
to AstraZeneca. St George Street may also cease its activities under any development plan of a licensed compound if the joint commercialization
committee determines that it is inappropriate to continue such plan for scientific, safety, or for ethical reasons, or that a licensed
product no longer meets an unmet medical need.
In
2020, St George Street and AstraZeneca entered into an amendment to the AZ License Agreement to add Covid-19 to the field for
licensed compound AZD1656. St George Street and AstraZeneca entered into a second amendment and a third amendment to the AZ License
Agreement. The second amendment, dated April 9, 2020,to the AZ
License Agreement added Schedule 1.36(a) to the AZ License Agreement, which describes additional terms and conditions that apply
only to the parties with respect to Covid-19 for the licensed compound AZD1656. The third amendment, dated April 27, 2021, added
Hashimoto’s thyroiditis, uveitis, preterm labor, and Covid-19 to the field for AZD1656 and added Schedule 1.42(a) to the AZ
License Agreement, which describes additional terms and conditions that apply to the parties (i) only with respect to
Hashimoto’s thyroiditis, uveitis, and preterm labor for the licensed compound AZD1656, and (ii) with respect to all other
indications and Licensed Compounds (as defined in the AZ License Agreement) as set forth in the AZ License Agreement, except with
respect to Covid-19 for AZD1656, for which Schedule 1.36(a) of the AZ License Agreement applies. The terms and conditions contained
in the second and third amendments to the AZ License Agreement also set forth the obligations and responsibilities of the parties
regarding supply of study drugs, conducting studies, and other matters.
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 $1.55 trillion in 2023 and is projected to grow at a compound annual growth
rate (“CAGR”) of 13.96% from 2024 to 2030. 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.
Moving
forward, revenue is forecast to grow an annualized 3.2% to $1.3 trillion over the next five years amid an anticipated persistence of
global demand for industry products.
Our
Initial Pipeline: AZD1656 and AZD5904
We
wholly own the intellectual property and the rights to further develop the solid-form patent pending Cocrystals of AZD1656 (AZD1656 Cocrystal
WO2023084313 - Patent Expires 02/09/2042) which we intend to target a wide range of autoimmune diseases.
In addition,
we currently have the exclusive rights to develop clinical assets, AZD1656 and AZD5904, which are licensed
to St George Street by AstraZeneca, in five indications.
Due
to our relationship with St George Street, we intend to leverage the data generated from these historical trials in order to investigate
the efficacy and safety to AZD1656 to potentially treat HT, uveitis, preterm labor, and renal transplant patients, and the efficacy and
safety of AZD5904 to treat IMI. AZD1656 has undergone testing in a total of 20 Phase I clinical trials and five Phase II clinical trials
conducted by AstraZeneca since 2008 and 19 of which were conducted in the U.S. Additional information about those clinical trials is
available at the U.S. National Library of Medicine’s website at www.clinicaltrials.gov (however, the information contained on or
otherwise accessible through such website is not part of this Annual Report). AZD5904 has undergone testing in five Phase I clinical
trials conducted by AstraZeneca, one of which was conducted in the U.S. While a significant amount of clinical trial data has already
been generated for both AZD1656 and AZD5904, some of this data was generated outside of the U.S. and accordingly may not be accepted
by the FDA. In the event that such data is not accepted by the FDA, additional clinical trials may be required, which would result in
additional costs and time to develop these clinical assets.
The
table below sets forth the pre-clinical or clinical trials that have been conducted by or at the direction of AstraZeneca to date on
the particular clinical asset. All of these pre-clinical or clinical trials were conducted by AstraZeneca prior to AstraZeneca entering
into its license agreement with St George Street. None of the pre-clinical or clinical trials that have taken place to date were conducted
by or at the direction of the Company.
Asset Therapeutic Area Stage of Development Location of Trials
AZD1656 Covid-19 Preliminary, Phase I United Kingdom
The
following table sets forth the current asset development stage for each of AZD1656 and AZD5904 for the indications noted below.
Phase I Phase II Phase III
AZD5904 Idiopathic Male Infertility Phase II Following completion of Phase II
AZD1656 Uveitis Phase II Following completion of Phase II
AZD1656 Preterm Labor Phase II Following completion of Phase II
AZD1656 Renal Transplant Phase II Following completion of Phase II
AZD1656 Covid-19, Long Covid N/A(2) N/A(2)
AZD1656
was subject to Phase I and Phase IIa 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 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.
AZD5904
was subject to five Phase I clinical studies, with a total of 1181 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 1400 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.
AZ1656
in Autoimmune Diseases
Autoimmune
diseases refers to a broad group of diseases and conditions that arise from an abnormal immune response to a functioning body part. For
example, autoimmune diseases may arise from an abnormal immune response of major organs (i.e., the heart, kidneys, bladder, liver, lungs,
and skin), glands (i.e., the adrenal gland, pancreas, thyroid, or reproductive organs), digestive system, and tissue (i.e., blood, connective
tissue, muscle, eyes, ears, or vascular system). Management believes that there are over 80 types of autoimmune diseases that have been
identified, including lupus, celiac disease, multiple sclerosis, rheumatoid arthritis, psoriasis, and inflammatory bowel disease. Autoimmune
diseases are often difficult to diagnose and often the cause of the disease is not known.
It
is estimated by the American Autoimmune Related Diseases Association (“AARDA”) that as many as 50 million Americans are living
with an autoimmune disease – at a cost of $86 billion a year and there is presently no totally effective treatment known to management.
The currently available treatments for autoimmune diseases include non-steroidal anti-inflammatory drugs (“NSAIDS”) or immune
suppressants. These treatments often improve the symptoms but ultimately do not cure the disease and often involve side effects.
AZD1656
is a highly specific glucokinase activator; originally developed by AstraZeneca for use in diabetes mellitus. It has now been tested
in over 1,000 patients with both type I and II diabetes and no significant safety concerns have been raised. It was most recently
tested in the ARCADIA Phase II trial in diabetic patients hospitalized with Covid-19 on the basis of new research into
immunometabolic modulation. We believe that AZD1656 may be used to activate a patient’s own immune system in order to limit
harmful inflation. We have identified several autoimmune diseases, which reflects good market potential, with a high level of need
that may be treatable using AZD1656. We believe that our clinical assets have the potential to treat numerous autoimmune diseases.
We intend to initially focus on the indications below in order to maximize the commercial potential of our clinical
assets.
Thyroid
Disease: Hashimoto’s Thyroiditis Disease
Hashimoto’s
Thyroiditis (“HT”) is an autoimmune disease involving the improper functioning of the thyroid. HT is an autoimmune disease
driven by T cells, which are one of the types of white blood cells, where the immune system attacks the thyroid gland.
Management
believes that HT is the most prevalent autoimmune thyroid disease worldwide and anticipates that the prevalence of HT will continue to
increase due to rising obesity and the rising prevalence of other autoimmune disorders that made patients more susceptible to HT.
The
current treatment for HT involves hormone replacement therapy with levothyroxine. However, determining the appropriate dose for each
individual is complex with the individual needing to continue hormone replacement therapy for the rest of his or her life while still
suffering with some symptoms of HT. Under the current treatment, the patient is monitored by measuring Thyroid-Stimulating Hormone levels
(“TSH”). In addition, this difficulty in titrating the appropriate dose of levothyroxine leads to a high burden of medical
appointments and the risk of development of comorbidities, including cardiovascular disease.
Management
believes that the global thyroid gland disorders treatment market was valued at $2.23 billion in 2021 and is set to grow from $2.37 billion
in 2023 to $2.95 billion by 2030, at a CAGR of 3.17% during the forecast period (2023-2030).
AZD1656
was previously subject to preclinical and clinical trials, including Phase I and Phase II trials, conducted by AstraZeneca relating to
its potential to treat type 2 diabetes. As of the date hereof, no preclinical or clinical trials have been conducted on the use of AZD1656
to treat HT.
We
intend to conduct further trials on AZD1656 relating to HT. We plan to conduct further research on AZD1656 to investigate if AZD1656
is a treatment option for HT, including investigating any negative side effects in the use of AZD1656 as compared to the currently available
treatment options for HT. We, in connection with a CRO, have prepared clinical trial protocols for the use of AZD1656 in HT in a Phase
II clinical trial: a Phase II, randomized, double-blind, placebo-controlled study to evaluate the efficacy and safety of AZD1656 in patients
with HT with an anticipated enrollment of 200 patients.
Pharmaceutical
companies typically find market entry for HT clinical assets challenging due to the manufacturing complexities and careful consideration
of manufacturing product, which are usually patented or trade secrets of companies. Due to its relationship with St George Street, we
have sufficient API to conduct Phase II clinical trials on AZD1656 for the treatment of HT. There can be no assurances that the clinical
trials that we intend to conduct on AZD1656 to treat HT will be successful.
Uveitis
Uveitis
is an autoimmune disease of the eye that refers to a number of intraocular inflammatory conditions and involves the swelling of the uvea,
the colored portion of the eyes. Management believes that in the U.S. uveitis causes an estimated approximately 30,000 new cases of blindness
per year and may be the third leading cause of blindness worldwide.3 Unlike other leading causes of blindness, uveitis is
particularly prevalent in younger working-age people. Uveitis has a prevalence of around 40-100 per 100,000 persons, and can be subdivided
into specific conditions, so it qualifies as a rare disease.4 We believe that a treatment for non-infectious uveitis would
be eligible for orphan drug designation, which provides for market exclusivity of 10 years in the European Union and seven years in the
United States. The global uveitis market size was valued at $456 million in 2022 and is estimated to reach $837 million by 2030, growing
at a CAGR of 4.8% during the forecast period (2023-2030).
Steroids,
which can cause elevated intraocular pressures and cataracts, are often used to manage uveitis. Most patients develop elevated intraocular
pressures and/or cataracts after long-term treatment with steroids and may have to switch therapies or the disease may become resistant
to steroid treatment. Biological drugs have been developed but these are expensive and not always effective as many patients still go
blind every year.
AZD1656
was previously subject to preclinical and clinical trials, including Phase I and Phase II trials, conducted by AstraZeneca relating to
its potential to treat type 2 diabetes. As of December 31, 2023, no preclinical or clinical trials have been conducted on the use of
AZD1656 to treat uveitis. We, in connection with a CRO, have prepared clinical trial protocols relating to the use of AZD1656 in uveitis
in a Phase II clinical trial: a Phase II, double-blind, placebo-controlled study to evaluate the efficacy and safety of ADZ1656 in patients
with non-infectious uveitis with an anticipated enrollment of 120 patients. We intend to conduct further trials on AZD1656 in order to
investigate if AZD1656 is an option to treat uveitis without the side effects involved in the current treatment using steroids. There
can be no assurances that the clinical trials that we intend to conduct on AZD1656 to treat uveitis will be successful.
Renal
Transplant Failure
Renal
transplant failure occurs when a patient’s body rejects a kidney transplant and involves the gradual decrease in kidney function
that starts following a kidney transplant surgery and often results in organ failure. According to the United Network for Organ Sharing,
there are around 93,000 patients waiting for a kidney transplant in the U.S. The United Network for Organ Sharing reports that the prevalence
of chronic kidney disease is rising due to other conditions, such as diabetes, and as a result of an aging population. The Organ Procurement
& Transplantation Network reported that during 2023, over 46,000 individuals received an organ transplant and all-time volume records
were set for kidney transplants of 27,329.6 Management believe that the global kidney transplant market is estimated to be
valued at $5.8 billion in 2021 and is expected to register a CAGR of 4.2% through to 2033.
The
current treatment for renal transplant failure involves using immunosuppressives to suppress the patient’s immune system, which
has numerous side effects including high blood pressure, weight gain, diabetes, dyslipidemia and some cancers. Malignancy, which refers
to uncontrolled growth and division of abnormal cells, is one of the most common causes of death in kidney transplant recipients. Immunosuppressives
are a major contributing factor to malignancy.
AZD1656
was previously subject to preclinical and clinical trials, including Phase I and Phase II trials, conducted by AstraZeneca relating to
its potential to impact on renal transplant patients with type 2 diabetes. We believe that AZD1656 may facilitate the immune system in
tolerating or accepting the transplanted kidney. We intend to conduct Phase II studies on AZD1656 to investigate if AZD1656 decreases
the rejection in kidney transplant patients. We are currently working with a CRO to prepare protocols for clinical trials to investigate
the use of AZD1656 to reduce the rejection in kidney transplant patients. There can be no assurances that the clinical trials that we
intend to conduct on AZD1656 to treat renal transplant patients will be successful.
Preterm
Labor