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 6. Reserved 53
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62
Item 8. Financial Statements and Supplementary Data 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 14. Principal Accountant Fees and Services 80
PART IV
Item 15. Exhibits and Financial Statement Schedules 81
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 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;
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
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.
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.
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.
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.
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.
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.
2IBISWorld Industry Report L6724-GL – Global Biotechnology, January 2026
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.
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.
The
following patent applications are relevant to the operation of our business:
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.
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:
● submission to the FDA of an NDA and payment of fees;
● satisfactory completion of an FDA advisory committee review, if applicable;
● FDA review and approval of the NDA.
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.
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.