Item 1A. Risk Factors 29
Item 1B. Unresolved Staff Comments 57
Item IC. Cybersecurity 57
Item 2. Properties 57
Item 3. Legal Proceedings 57
Item 4. Mine Safety Disclosures 57
PART II
Item 6. Reserved 58
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 70
Item 8. Financial Statements and Supplementary Data 70
Item 9A. Controls and Procedures 70
Item 9B. Other Information 71
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 71
PART III
Item 10. Directors, Executive Officers and Corporate Governance 72
Item 11. Executive Compensation 79
Item 14. Principal Accountant Fees and Services 89
PART IV
Item 15. Exhibits and Financial Statement Schedules 90
Signatures. 93
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
On
September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old
Conduit”), Murphy Canyon Acquisition Corp (“MURF”) and Conduit Merger Sub, Inc., a Cayman Islands exempted company
and a wholly owned subsidiary of MURF (“Merger Sub”), was completed pursuant to the Agreement and Plan of Merger, dated November
8, 2022, as amended, (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, at the closing, (i) Merger
Sub merged with and into Old Conduit, with Old Conduit surviving the Business Combination as a wholly-owned subsidiary of MURF, and (ii)
MURF changed its name from Murphy Canyon Acquisition Corp. to Conduit Pharmaceuticals Inc. (“Conduit” or the “Company”).
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 continue to evaluate novel artificial intelligence (“AI”) and cybernetics approaches to drug re-purposing,
intellectual property and asset selection to give Conduit a competitive advantage.
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 scientists 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.
Simultaneously,
Conduit 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.
In
connection with the funding and development of clinical assets, we evaluate and select the specific molecules to be developed and collaborate
with external 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, AstraZeneca agreed to grant a license to the Company under certain intellectual property
rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor
AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for the development
and commercialization of the relevant products licensed under the related License Agreement (the “Licensed Products”). 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 for which indications.
Through
this relationship, there are considerable APIs that were manufactured by AstraZeneca
(prior to conducting its clinical trials) available to Conduit. As a result, Conduit may not have to develop the APIs, which is often
a time consuming and expensive process, and the APIs already produced were subject to rigorous quality control measures.
In
collaboration with SARBORG Limited (“Sarborg”), Conduit intends to leverage an advanced
artificial intelligence (AI) and cybernetics platform to evaluate key deliverables across multiple areas of the Company’s
operations, including drug repurposing, drug discovery, solid-form identification, and clinical trial monitoring.
The
Sarborg Agreement (defined and described below) is designed to address longstanding challenges in the pharmaceutical sector, in
particular by reducing human error in critical decision-making processes in both clinical development and asset identification. By
integrating Sarborg’s algorithmic AI/cybernetics technology, Conduit aims to enhance efficiency, lower costs, and accelerate
timelines by minimizing human intervention, ultimately optimizing the drug development cycle and giving Conduit a competitive
advantage in the sector.
Through
this relationship, Conduit 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, Conduit to 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.
In
addition, Conduit will retain a perpetual, non-exclusive, royalty-free, and assignable right to use any platform or technology developed
by Sarborg in association with the deliverables. Ongoing support from Sarborg will ensure these systems evolve with Conduit’s needs,
driving long-term innovation in areas like IP creation, regulatory strategy, and clinical trial monitoring. This partnership reinforces
Conduit’s commitment to leveraging AI-driven solutions to accelerate growth, deliver value to stockholders, and maintain a competitive
edge in the pharmaceutical sector.
Sarborg is considered to
be a related party of conduit, as Dr. Andrew Regan, a stockholder of Conduit and member of Conduit’s board of directors,
also sits on the board of directors of Sarborg. Refer to Note 16 to our financial statements included elsewhere in this Annual Report
for additional details on the relationship between Conduit and Sarborg.
This
strategic move reaffirms Conduit’s commitment to adopting forward-thinking solutions to stay at the forefront of innovation in
the pharmaceutical industry. By reducing reliance on traditional, labor-intensive methods and harnessing the power of AI-driven technology,
Conduit is well-positioned to lead in areas such as drug repurposing, clinical trial monitoring, and IP creation, ensuring the Company’s
long-term growth and market leadership.
Furthermore,
Conduit believes that it is well positioned to pursue, 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 disorders 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 its metabolite AZD5658 and AZD5904
We
wholly own the intellectual property and the rights to further develop the solid-form Cocrystals of AZD1656 (AZD1656 Cocrystal–
pending international patent applications, which, if granted should expire no earlier than 2042) that we intend to target a wide range
of autoimmune disorders.
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.
Outside
of our proprietary owned patented clinical assets, AstraZeneca granted a license to the Company of certain intellectual property rights
controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor
AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for the development
and commercialization of the Licensed Products. The Company is required to use commercially reasonable efforts to develop and commercialize
the Licensed Products.
Due
to our relationship with AstraZeneca, we intend to leverage the data generated from these historical trials in order to investigate the
efficacy and safety to AZD1656 to potentially treat Lupus and ANCA Vasculitis 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 to commercialize these assets in the United States, which
would result in additional costs and time to develop these clinical assets.
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.
Asset
Development
Our
initial development plan is to conduct a Phase II clinical trial on AZD1656 in Lupus (including Lupus Nephritis) and ANCA Vasculitis
(AAV). Should we choose to develop AZD1656, AZD5658, or AZD5904, that development would be subject to the terms of the License 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
disorders 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, United Kingdom (the“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 our relationship
with AstraZeneca, our Initial Pipeline has already undergone initial pre-clinical, and, in some instances, clinical testing conducted
by AstraZeneca, which 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.
Principal
Strategic Partnerships
License
Agreement – Conduit and AstraZeneca
On
August 7, 2024, the Company and AstraZeneca entered into the License Agreement. Pursuant to such License Agreement, AstraZeneca agreed
to grant a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators
AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic
male infertility. The Company will be responsible for the development and commercialization of the Licensed Products under the
related License Agreement. The Company is required to use commercially reasonable efforts to develop
and commercialize the Licensed Products.
As
consideration for the grant of the license, the Company (i) granted AstraZeneca common stock pursuant to the Issuance Agreement (as further
set out below), (ii) paid AstraZeneca an up-front payment of $1.5 million, and (iii) is obligated to pay AstraZeneca a percentage (on
a tiered basis) of any amounts it may receive in connection with a grant of a sublicense (subject to various customary exceptions).
AstraZeneca
has been granted a right of first negotiation to develop, manufacture, and commercialize a Licensed Product if the Company receives an
offer for, or solicits, a transaction where a third party would obtain the right to develop, manufacture, or commercialize a Licensed
Product. If AstraZeneca exercises such right, the parties would negotiate in good faith for an agreed period of time on an exclusive
basis.
Either
party may terminate the License Agreement for material breach (subject to a cure period) or insolvency of the other party. The Company
may terminate the License Agreement for convenience (in its entirety or on a Licensed Product-by-Licensed Product basis). In addition,
AstraZeneca may terminate the License Agreement in certain circumstances, including (but not limited to) the Company ceasing development
of all Licensed Products (subject to certain exceptions for normal pauses or gaps between clinical studies).
In
addition, in connection with the execution of the License Agreement, the Company and AstraZeneca entered into the Issuance Agreement,
whereby the Company issued AstraZeneca 95,044 shares of the Company’s Common Stock. The Issuance Agreement provides
AstraZeneca with resale registration rights for such shares.
Services
Agreement – Conduit 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 will provide algorithmic and cybernetic technology services to
Conduit, including the development of decision-support tools and advanced cybernetic systems tailored to enhance Conduit’s
decision-making processes and maximize the value of its pharmaceutical asset portfolio.
Sarborg
will perform the services to Conduit comprised of three phases: the Initial Phase (0-24 weeks) focuses on establishing a foundation for
collaboration and aligning Sarborg’s services with Conduit’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 Conduit’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, Conduit has successfully completed the Initial Phase of its collaboration with Sarborg, establishing a strong foundation for integrating
AI-driven solutions into our operations. This phase focused on identifying key inputs for the algorithmic approach and ensuring alignment
between Sarborg’s services and Conduit’s strategic goals. As part of this effort, Sarborg has successfully delivered three
key milestones. First, they conducted detailed teach-in sessions with Conduit’s management team to gain a deeper understanding
of our objectives, challenges, and operational workflows, resulting in documented meeting agendas, minutes, and action plans. Second,
they finalized and validated a set of proprietary inputs essential for their cybernetic models, tailored specifically to Conduit’s
portfolio and R&D pipeline. Finally, they completed an in-depth market analysis of potential cocrystal candidates, assessing the
patent landscape, competitive positioning, and market size. The insights from this Annual Report are now informing Conduit’s ongoing
strategic decision-making. With these key milestones delivered, we are now progressing to the next phase of development.
Sarborg
has now commenced Phase II: The Development Phase, which focuses on building the technological infrastructure necessary to integrate
AI into Conduit’s operations. As part of this, Sarborg has successfully completed the first milestone, Dashboard Creation and Refinement,
delivering personalized dashboards that provide Conduit’s key personnel with real-time access to critical data related to deliverables,
clinical trials, and drug discovery. These initial dashboards, along with user interface mock-ups and a dashboard user guide, will serve
as the foundation for further refinements. Moving forward, the platform will continue to be optimized to maximize efficiency and ensure
seamless integration into Conduit’s workflows.
Master
Service Agreement – Conduit and Charles River Laboratories
On
February 7, 2025, Conduit 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 Conduit, 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, one SOW, dated February 11, 2025, has been entered into. Charles River will conduct the studies in compliance with
applicable laws and industry standards, and Conduit will provide necessary test articles and materials. The Charles River MSA
includes provisions for confidentiality, intellectual property ownership, indemnification, and dispute resolution. The Charles River
MSA has a term of five years and can be terminated by either party under specified conditions.
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 $1.68 trillion in 2024 and is projected to grow at a compound annual growth
rate (“CAGR”) of 9.18% from 2024 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.
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.2
Our
Initial Pipeline: AZD1656, AZD5658 and AZD5904
We
wholly own the intellectual property and the rights to further develop the solid-form Cocrystals of AZD1656 (AZD1656 Cocrystal–
pending international patent applications if granted should expire no earlier than 2042) which we intend to target a wide range of autoimmune
disorders.
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.
Outside
of our proprietary owned patented clinical assets, AstraZeneca granted a license to the Company of certain intellectual property rights
controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor
AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for the development
and commercialization of the Licensed Products. The Company is required to use commercially reasonable efforts to develop and commercialize
the Licensed Products.
Due
to our relationship with AstraZeneca, we intend to leverage the data generated from these historical trials in order to investigate the
efficacy and safety to AZD1656 to potentially treat Lupus and ANCA Vasculitis 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.
1(2025,
January 8). Biotechnology Market Size to Worth Around USD 3.54 Trillion by 2033. BioSpace.com. https://www.biospace.com/press-releases/biotechnology-market-size-to-worth-around-usd-3-54-trillion-by-2033
2IBISWorld Industry Report L6724-GL – Global Biotechnology, May 2021
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 Conduit entering into
the License Agreement with AstraZeneca. 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
AZD5658 Type 2 Diabetes Preliminary, Phase I United States
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
AZD1656 Lupus & ANCA Vasculitis ☒ Phase II Following completion of Phase II
AZD5904 Idiopathic Male Infertility ☒ Phase II Following completion of Phase II
AZD5658 Further Autoimmune Disorders ☒ 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 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 1,200 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.
AZ1656
in Autoimmune Disorders
Autoimmune
disorders refers to a broad group of disorders and conditions that arise from an abnormal immune response to a functioning body part.
For example, autoimmune disorders 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 disorders
that have been identified, including lupus, celiac disease, multiple sclerosis, rheumatoid arthritis, psoriasis, and inflammatory bowel
disease. Autoimmune disorders are often difficult to diagnose and often the cause of the disorders 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 disorders 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 disorders, 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 disorders. We intend to initially focus on the indications
below in order to maximize the commercial potential of our clinical assets.
Lupus
Nephritis
Lupus
Nephritis (“LN”) is a severe progression of Systemic Lupus Erythematosus (“SLE”) where the immune system attacks
the kidneys, often resulting in renal failure. There is currently no cure or long-term remission treatment available. LN is clinically
evident in 50-60% of patients with SLE, and is histologically evident in most SLE patients, even those without clinical manifestations
of kidney disease. LN is the main cause of SLE related mortality. Current therapy is based on long-term corticosteroid or immunosuppressive
therapy, with clinical efficacy of biological drugs not yet proven in LN. Side effect issues of all current therapies demonstrate an
unmet need for a safer, patient compliant therapy in LN.
The
Company believes that LN presents a lucrative opportunity given the potential oversight of two conditions, as a Phase IIa trial can be
designed to allow readouts on the wider characteristics of SLE as well as the nephritis aspects, allowing assessment of the potential
of AZD1656 in the field of SLE as a whole. Additionally, LN is an orphan disease that the Company believes has around 80,000 to 100,000
patients in the U.S., and one million patients worldwide, thereby offering additional incentives for investors.
The
Company believes the global LN market was valued at $3.3 billion in 2022 and is projected to grow from $3.6 billion in 2023 to $6.78
billion by 2032, exhibiting a CAGR of 10.3% during the forecast period.
SLE
is characterized by dysregulation and a hyperactivity of immune response. In LN, Teff subtype (TH17) has shown significant hyperactivation
leading to skewed T cell differentiation resulting in continued proinflammatory environment, leading to prolonged inflammation and subsequent
tissue damage and organ function loss. TH17/Treg dysregulation has been characterized in lupus patients compared to healthy individuals.1
During
a study in mice, findings showed that the IL2/CD25 fusion protein that selectively targets IL-2 on Treg cells induced immune suppression
in a preclinical LN model demonstrating inhibition of LN based on levels of proteinuria, autoantibody titers and kidney histology scores.2
ANCA
Vasculitis
ANCA
Vasculitis (“AAV”) is an orphan status autoimmune disease affecting small blood vessels which can lead to multiple organ
injury, especially the kidneys, lungs and peripheral nerves. Undiagnosed AAV has a 90% mortality rate within two years.3
Current
maintenance therapies rely on combination of corticosteroid and rituximab, both known for long term use side effects. Recently approved
drugs target specific subpopulations of AAV and have tolerability and side effect issues which demonstrate an unmet need for safer long-term
therapies applicable to all AAV sufferers.
An
imbalance of Th17/activated Treg cells has been shown in AAV and this has been correlated with renal involvement (with a positive correlation
in creatinine and BUN levels). 4
Low
dose IL2 therapy in AAV patients, the Company believes, resulted in rebalance of Th17/Treg ration. The levels of Erythrocyte Sedimentation
Rate (ESR) and C-Reactive Protein (CSR) were also significantly decreased, which the Company believes indicates an improvement in disease
activity.
The
Company believes the seven major AAV markets reached a value of $339.0 million in 2023 and is expected to reach $534.3 million by 2034,
exhibiting a CAGR of 4.22% during 2024 to 2034.
1
Paquissi FC et al. Front Med (Lausanne). 2021 Sep; 8: 654912 (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8446428/)
2
Wang et al. Mol Immunol. 2020; 118: 19-29 (https://pubmed.ncbi.nlm.nih.gov/34108258/)
3
Hunter et al. BMJ. 2020;369 (https://www.bmj.com/content/369/bmj.m1070)
4
Wang et al. Mol Immunol. 2020; 118: 19-29 (https://pubmed.ncbi.nlm.nih.gov/34108258/)
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 autoimmune disorders.
We
intend to conduct further trials on AZD1656 relating to autoimmune disorders. We plan to conduct further research on AZD1656 to investigate
if AZD1656 is a treatment option, including investigating any negative side effects in the use of AZD1656 as compared to the currently
available treatment options.
AZD5904
in Idiopathic Male Infertility
Idiopathic
Male Infertility (“IMI”) is defined as failure of a couple to conceive after one year of regular sexual intercourse where
the physical examination and endocrine laboratory testing of the male are normal, but semen analysis reveals sperm abnormalities. Approximately
15% of couples globally, or 48.5 million couples globally, are infertile and that 30% of infertility cases can be attributed solely to
the female, 30% can be attributed solely to the male, 30% can be attributed to a combination of both partners, and 10% of cases have
an unknown cause.5 According to the National Library of Medicine, male infertility accounts for 30% of infertility cases
and its prevalence in the general population approximately ranges between 9 to 15%.6 Our management believes that male
sperm counts have declined in Western men and will continue to decline due, in part, to increasing rates of disorders such as obesity
and diabetes that can reduce fertility.
IMI
affects families worldwide and is inherent in problems of reproduction. Currently, there are no specific treatments for male infertility,
and we are not aware of any other company that is developing a treatment for male infertility. There are no approved pharmacotherapies
for idiopathic male infertility. Lifestyle medicine and unproven supplements are often used. Intracytoplasmic sperm injection, a form
of in vitro fertilization, is the only treatment currently available for male infertility. This process is not a treatment of male infertility
but rather is an alternative means of fertilizing the egg. In vitro fertilization places a significant burden on the woman as it requires
the induction of egg production and harvesting of eggs. In vitro fertilization is costly and time consuming and has modest success rates.
Management believes that the male infertility market size is expected to grow from $3.72 billion in 2023 to $4.42 billion by 2028, at
a CAGR of 3.54% during the period 2023-2028.
Damaged
sperm are unable to successfully fertilize eggs due to factors including impaired motility, impaired ability to penetrate and/or DNA
damaged sperm that is unable to form a viable fetus. Our development pipeline for AZD5904 includes a potent, irreversible inhibitor of
human myeloperoxidase, which we refer to as MPO, that has the potential to treat idiopathic male infertility.
AZD5904
was investigated by AstraZeneca for the treatment of idiopathic male infertility in Phase I trials, which confirmed the suitability to
progress to Phase II trials. While AZD5904 is Phase II ready, our management intends to conduct a Phase Ib “proof of mechanism”
trial to verify AZD5904 has the intended biological effect in semen (as well as in blood) prior to commencing a Phase II trial for the
use of AZD5904 to treat idiopathic male infertility. Specifically, our management intends to conduct the Phase Ib study in order to see
if the trial will provide evidence that AZD5904 has its intended effect of inhibiting myeloperoxidase and reduce oxidative stress in
semen. We believe that AZD5904 has the potential to be used to create a tablet that could treat IMI and would be the first drug developed
to directly treat IMI. We, in connection with a CRO, have prepared clinical trial protocols relating to the use of AZD5904 to treat IMI
in a Phase Ib clinical trial: a Phase Ib, randomized, double-blind, placebo-controlled, dose escalation study to evaluate the safety,
tolerability and preliminary efficacy of AZD5904 in adult men with IMI with an anticipated enrollment of 60 patients, and a Phase II
clinical trial: a Phase II, randomized, double-blind, placebo-controlled clinical trial to evaluate the efficacy and safety of AZD5904
in the treatment of IMI with an anticipated enrollment of 200 patients. There can be no assurances that the clinical trials that we intend