What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-12 compared with 2026-07-15 · 259 added, 210 removed, 282 unchanged (62% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

unaudited condensed consolidated financial statements and the related notes included under Part I, Item 1 of this Quarterly Report

on Form 10-Q (this “Quarterly Report”) as well as the Company’s audited financial statements and notes thereto

included in its Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on April 15, 2026.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks

and uncertainties.

The following discussion contains forward-looking statements based upon current expectations that involve risks,

uncertainties and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements

as a result of various factors, including those set forth under the section titled “Risk Factors” or in other parts of

this Quarterly Report.

Our historical results are not necessarily indicative of the results that may be expected for any period in

All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited

condensed consolidated financial statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q

(this “Quarterly Report”) as well as the Company’s audited financial statements and notes thereto included in its Annual

Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on April 15, 2026.

Certain information contained

in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

The following

discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions.

actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including

those set forth under the section titled “Risk Factors” or in other parts of this Quarterly Report.

Our historical results

are not necessarily indicative of the results that may be expected for any period in the future.

All dollar amounts are expressed in

thousands of United States dollars (“$”), unless otherwise indicated.

September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old

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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

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.

Equity’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by

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the Company’s assets.

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

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.

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.

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

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.

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.

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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.

CDT, also sits on the board of directors of Sarborg and is a shareholder of Sarborg through his ownership of Corvus, Chele Chiavacci Farley, a director of CDT is

also a shareholder of Sarborg and Ulrik Olsen, a director of CDT is also a shareholder of Sarborg.

the first quarter of 2026, the Company and Sarborg furthered our partnership through a strategic investment by the Company in Sarborg.

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large populations where there is no present treatment or the existing treatments carry significant unwanted side effects.

The Company effected four reverse stock splits of its common stock pursuant to amendments to the Company’s Second Amended

and Restated Certificate of Incorporation that were previously approved by the Company’s stockholders and authorized by the Board

of Directors.

Company effected five reverse stock splits of its common stock pursuant to amendments to the Company’s Second Amended and Restated

Certificate of Incorporation that were previously approved by the Company’s stockholders and authorized by the Board of Directors.

The reverse stock splits were implemented as follows:

a 1-for-100 reverse stock split effective January 24, 2025, a 1-for-15

reverse stock split effective May 19, 2025, a 1-for-8 reverse stock split effective October 10, 2025 and a 1-for-25 reverse stock split

effective March 26, 2026.

a 1-for-100 reverse stock split effective January 24, 2025, a 1-for-15 reverse

stock split effective May 19, 2025, a 1-for-8 reverse stock split effective October 10, 2025, a 1-for-25 reverse stock split effective

March 26, 2026, a 1-for-10 reverse stock split effective July 20, 2026.

fractional shares were issued in connection with the reverse stock splits.

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The number of our issued and outstanding shares of common stock, when accounting

for the reverse stock splits, was 4,722,457 and 92,140 shares as of March 31, 2026 and December 31, 2025, respectively.

for the reverse stock splits, was 631,080 and 9,214 shares as of June 30, 2026 and December 31, 2025, respectively.

accordance with ASC 260, Earnings Per Share, all historical share and per-share amounts presented in the accompanying consolidated financial

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expensed as the benefits are consumed.

incurred approximately $0.8 million and $0.9 million on research and development activities during the three months ended March 31,

2026 and March 31, 2025, respectively.

Our research and development activities have been focused on developing co-crystals of

AZD1656 to increase patent life as well as purchasing technology to help us determine the feasibility that AZD1656, and potentially

incurred approximately $0.3 million and $1.1 million on research and development activities during the three and six months ended June

30, 2026, respectively.

We incurred approximately $1.8 million and $2.8 million on research and development activities during the three

and six months ended June 30, 2025, respectively.

Our research and development activities have been focused on developing co-crystals

of AZD1656 to increase patent life as well as purchasing technology to help us determine the feasibility that AZD1656, and potentially

other de-prioritized assets, may reach commercialization.

Some of this work was completed by third-party CROs but all intellectual

property is retained by us.

We currently have one pending international patent application and two pending national patent

applications.

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.

Some of this work was completed by third-party CROs but all intellectual property

is retained by us.

We currently have one pending international patent application and two pending national patent applications.

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.

our equity method investment in Sarborg, we note that revenue generated by Sarborg is not consolidated and the loss upon our equity method

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income (expenses), net

income (expenses), net consists of change in the fair value of options, change in fair value of convertible notes, change in fair value

of digital assets and expense incurred upon the issuance of warrants during the three months ended March 31, 2026.

income (expenses), net consists of change in the fair value of options, change in fair value of convertible notes and expense

incurred upon the issuance of warrants during the six months ended June 30, 2026.

on equity method investment

Loss on equity method

investment consists of our pro rata portion of losses incurred through our 20% equity method investment in Sarborg.

See Note 4, Note

13 and Note 16 for further discussion of our relationship with Sarborg.

on equity method investment consists of our pro rata portion of losses incurred through our 20% equity method investment in Sarborg.

See Note 4, Note 13 and Note 16 for further discussion of our relationship with Sarborg.

expense, net consists primarily of interest expense on convertible notes, promissory notes and interest expense on deferred commissions

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following table sets forth our results of operations for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollar amounts in thousands)

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Total other expense, net

of the Three Months Ended March 31, 2026 and 2025

of the Three Months Ended June 30, 2026 and 2025

and Development Expenses

Months ended March 31,

Three Months ended June 30,

(Dollar amounts in thousands)

Research and development expenses

and development expenses decreased by $0.1 million, or 15%, to $0.8 million for the three months ended March 31, 2026, as compared

to $0.9 million for the three months ended March 31, 2025.

The decrease was primarily attributable to a $0.2 million decrease in

expense related to our transactions with Sarborg and a $0.1 million decrease related to Charles River activity.

The decrease was

partially offset by an increase of $0.1 million related to the Thesprogen agreement entered into during 2026 and an increase of $48

thousand related to a third-party consultant’s research and development activity.

and development expenses decreased by $1.6 million, or 84%, to $0.3 million for the three months ended June 30, 2026, as compared to

$1.9 million for the three months ended June 30, 2025.

The decrease was primarily attributable to a $1.5 million decrease in expense

related to our transactions with Sarborg and a $0.1 million decrease related to the Thesprogen agreement during the three months ended

June 30, 2026.

and Administrative Expenses

Months ended March 31,

Three Months ended June 30,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $0.2 million, or 7%, to $2.9 million for the three months ended March 31, 2026, compared to

$2.7 million for the three months ended March 31, 2025.

The increase was primarily driven by a $0.2 million increase in audit and accounting

fees and a $0.2 million increase in travel expense, partially offset by a $0.2 million decrease in salaries and stock based compensation,

a $0.1 million decrease in insurance expense and a $47 thousand decrease in legal expense.

Months ended March 31,

and administrative expenses decreased by $0.4 million, or 13%, to $2.7 million for the three months ended June 30, 2026, compared to

$3.1 million for the three months ended June 30, 2025.

The decrease was primarily driven by a $0.6 million decrease in legal and professional

fees, and a $0.3 million decrease in salaries and stock-based compensation and $0.1 million decrease in insurance expense, partially

offset by a $0.3 million increase in audit and accounting fees and a $0.3 million increase in other general and administrative expenses.

Three Months ended June 30,

(Dollar amounts in thousands)

Other expense, net

expense, net decreased by $0.7 million or 70%, to $0.3 million for the three months ended March 31, 2026, compared to a $1.0 million

for the three months ended March 31, 2025.

The decrease was primarily driven by a decrease of $1.6 million of expense for the net

changes in fair value of convertible notes payable, partially offset by $0.4 million change in the gain upon a waiver of accrued interest, $0.3 million change in

gain upon debt extinguishment, $0.1 million change on the gain on change in the fair value of warrants, and a $0.1 million change on the

gain on the issuance of shares for services.

further details refer to Note 14 in the unaudited condensed consolidated financial statements for the three months ended March 31,

2026 and March 31, 2025 included elsewhere in this document.

Loss on Investment

Months ended March 31,

expense, net increased by $0.5 million or 50%, to $1.5 million for the three months ended June 30, 2026, compared to $1.0 million for

the three months ended June 30, 2025.

The increase was primarily driven by a decrease of $0.2 million of expense related to conversions

and changes in fair value of convertible notes payable and a $0.3 million change in loss upon debt extinguishment.

further details refer to Note 14 in the unaudited condensed consolidated financial statements included elsewhere in this document.

on Investment

Three Months ended June 30,

(Dollar amounts in thousands)

Loss on investment

Loss on equity method investments was $0.1 million for the three months ended March 31, 2026.

The loss was driven by a loss on the change in the carrying value of our investment in Sarborg

with no comparable activity during the three months ended March 31, 2025.

Three Months ended

on equity method investments was $0.1 million for the three months ended June 30, 2026.

The loss was driven by a loss on the change in

the carrying value of our investment in Sarborg with no comparable activity during the three months ended June 30, 2025.

Three Months ended June 30,

(Dollar amounts in thousands)

Interest expense, net

expense, net decreased by $0.1 million, or 72%, to $0.1 million for the three months ended March 31, 2026, as compared to $0.2

million for the three months ended March 31, 2025.

expense, net decreased by $40,000, or 70%, to $17,000 for the three months ended June 30, 2026, as compared to $57,000 for the three

months ended June 30, 2025.

The decrease was driven by a decrease of the principal outstanding on the A.G.P.

Convertible Note as a result of conversions, decrease of the principal outstanding on the August 2024 Nirland Note and October 2025

Nirland Note as a result of conversions and repayment in full during the three months ended March 31, 2025, and a decrease of $65

thousand of debt issuance cost amortization related to the Convertible Promissory Note Payable , partially offset by $23

thousand of interest expense related to the Ascent Note which was entered into during the three months ended March 31, 2026.

Convertible Note as a

result of conversions and settlement during the three months ended June 30, 2026.

of the Six Months Ended June 30, 2026 and 2025

and Development Expenses

Six Months ended June 30,

(Dollar amounts in thousands)

Research and development expenses

and development expenses decreased by $1.7 million, or 61%, to $1.1 million for the six months ended June 30, 2026, as compared to $2.8

million for the six months ended June 30, 2025.

The decrease was primarily attributable to a $1.7 million decrease in expense related

to research and development activity with Sarborg.

and Administrative Expenses

Six Months ended June 30,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses decreased by $0.2 million, or 4%, to $5.6 million for the six months ended June 30, 2026, compared to $5.8

million for the six months ended June 30, 2025.

The decrease was primarily driven by a $0.6 million decrease in legal and professional

fees, and a $0.4 million decrease in salaries and stock-based compensation and $0.1 million decrease in insurance expense, partially

offset by a $0.4 million increase in audit and accounting fees, a $0.1 million increase in travel expenses, and a $0.4 million increase

in other general and administrative expenses.

Six Months ended June 30,

(Dollar amounts in thousands)

Other expense, net

expense, net decreased by $0.2 million or 8%, to $1.8 million for the six months ended June 30, 2026, compared to $2.0 million for

the six months ended June 30, 2025.

The decrease was primarily driven by a decrease of $0.9 million of expense for the net changes in

fair value, loss upon conversion and extinguishment of convertible notes payable, partially offset by a decrease of $0.4 million in the

gain upon a waiver of accrued interest, $0.1 million change on the gain on change in the fair value of warrants, and a $0.1 million change

on the gain on the issuance of shares for services.

further details refer to Note 14 in the unaudited condensed consolidated financial statements included elsewhere in this document.

on Investment

Six Months ended June 30,

(Dollar amounts in thousands)

Loss on investment

on equity method investments was $0.2 million for the six months ended June 30, 2026.

The loss was driven by a loss on the change in

the carrying value of our investment in Sarborg with no comparable activity during the six months ended June 30, 2025.

Six Months ended June 30,

(Dollar amounts in thousands)

Interest expense, net

expense, net decreased by $167,000, or 72%, to $66,000 for the six months ended June 30, 2026, as compared to $233,000 for the

six months ended June 30, 2025.

The decrease was driven by a $102,000 million decrease of the from a decrease in the principal

outstanding on the A.G.P.

Convertible Note due to conversions and settlement during the six months ended June 30 2026, a $33,000

decrease as a result of the settlement of the August 2024 Nirland Note and October 2025 Nirland Note during the six months ended

June 30, 2025, and a decrease of $65,000 million of debt issuance cost amortization related to the Convertible Promissory Note Payable,

partially offset by $28,000 of interest expense related to the Ascent Note which was entered into during the three months ended

June 30, 2026.

and Capital Resources

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To date, our primary sources of capital have

been through convertible debt, private placements of equity securities and the Sales Agreement with A.G.P., dated October 23, 2024, as amended.

During the three months ended

March 31, 2026 and 2025, we incurred operating losses of $3.7 million and $3.6 million, respectively.

been through convertible debt, private placements of equity securities and the Sales Agreement with A.G.P.

During the six months ended

June 30, 2026 and 2025, we incurred operating losses of $6.7 million and $8.6 million, respectively.

and Uses of Liquidity

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As a result, our business, financial condition, and results of operations could be materially affected.

has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12

months from the date of the filing of this Quarterly Report.

has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months

from the date of the filing of this Quarterly Report.

This is based on our analysis under applicable accounting principles.

These unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern

and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and

classification of liabilities that may result from the outcome of this uncertainty.

These unaudited

condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include

adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities

that may result from the outcome of this uncertainty.

material cash requirements include the following contractual and other obligations.

February 19, 2026, the Company entered into a Securities Purchase Agreement with all of the stockholders of Sarborg.

The investors

of Sarborg agreed to sell to the Company, and the Company agreed to acquire from the investors, an aggregate of 1,020 shares of

Sarborg, representing approximately 20% of the outstanding common stock of Sarborg.

The investors of

Sarborg agreed to sell to the Company, and the Company agreed to acquire from the investors, an aggregate of 1,020 shares of Sarborg,

representing approximately 20% of the outstanding common stock of Sarborg.

consideration for the purchase, the Company has agreed to issue to the investors, in the aggregate:

(i) 23,920 shares of the Company’s

Common Stock, exercise price of $0.0025 per share and (ii) pre-funded warrants (the to purchase up to 4,399,156 shares of Common.

the Company has agreed to pay Sarborg cash consideration of $8 million, with the cash portion of the consideration deferred until such

time as the Company raises no less than $20 million through the use of an at-the-market facility program.

As of March 31, 2026, the $8

million cash portion of consideration for our investment in Sarborg was still outstanding.

We expect to raise the funds through an at-the-market

facility program and repay the $8 million within 12 months of the issuance of the financial statements.

to Note 4 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form

(i) 2,392 shares of the

Company’s Common Stock, exercise price of $0.025 per share and (ii) pre-funded warrants to purchase up to 439,915 shares of

Common Stock.

In addition, the Company has agreed to pay Sarborg cash consideration of $8 million, with the cash portion of the

consideration deferred until such time as the Company raises no less than $20 million through the use of an at-the-market facility

As of June 30, 2026, the $8 million cash portion of consideration for our investment in Sarborg was still outstanding.

expect to raise the funds through an at-the-market facility program and repay the $8 million within 12 months of the issuance of the

financial statements.

to Note 4 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Convertible Note

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Convertible Note, provided that A.G.P.

has given at least three business days

written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal

amount and all interest accrued converted into shares of the Company’s Common Stock, at the lower of the Reverse Split price

and the market price per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as

provided therein and to take into account any future share splits or reverse splits.

has given at least three business days written

notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount and all

interest accrued converted into shares of the Company’s Common Stock, at the lower of the Reverse Split price and the market price

per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as provided therein and to take

into account any future share splits or reverse splits.

However, the conversion of the A.G.P.

Convertible Note may not occur prior to the Company having sufficiently authorized shares of Common Stock to permit the entire

conversion of the convertible promissory note.

Refer to Note 7 to our unaudited condensed consolidated financial statements included

elsewhere in this Quarterly Report on Form 10-Q.

the three months ended March 31, 2026, the holder of the A.G.P.

Convertible Note converted $0.7 million of principal and interest into

25,760 shares of the Company’s Common Stock, respectively.

As of March 31, 2026, there was approximately $1.9 million in outstanding

principal and interest remaining.

Convertible Note may not occur prior to

the Company having sufficiently authorized shares of Common Stock to permit the entire conversion of the convertible promissory note.

Refer to Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

During the six months ended June

30, 2026, the holder of the A.G.P.

Convertible Note converted the remaining $2.5 million of principal and interest into 129,911 shares

of the Company’s Common Stock.

Secured Promissory Note with J.J.

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of closing fees and was funded in two tranches.

Note is payable to the Lender over twenty-four equal weekly installments of $82 thousand commencing on June 18, 2026, which may be paid

in cash or, at the option of the Company once an applicable resale registration statement is declared effective by the Securities and

Exchange Commission covering the resale of any shares of the Company’s common stock, par value $0.0001 per share that may be received

on such conversion.

Note is payable to the Lender over twenty-four equal weekly installments of $82,000 commencing on July 10, 2026, which may be paid in

cash or, at the option of the Company once an applicable resale registration statement is declared effective by the Securities and Exchange

Commission covering the resale of any shares of the Company’s common stock, par value $0.0001 per share that may be received on

such conversion.

Additionally,

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of the Warrant Shares (such date, the “Stockholder Approval Date”) and will expire five years after the Stockholder Approval

March 3, 2026, the Company entered into a Securities Purchase Agreement with Ascent Partners Fund LLC (“Ascent”) and

issued a senior secured convertible promissory note (the “Ascent Note”) with a principal amount of approximately $0.6

Unless earlier repaid or converted in accordance with its terms, the Ascent Note was due to mature on July 3, 2026.

Company and Ascent may mutually agree to extend the maturity date by up to two months.

The Ascent Note bears interest at 10% per

annum and is secured by a first-priority security interest in the collateral pledged pursuant to the related security agreement and

What changed 10-Q

Item 2. Management’s Discussion and Analysis