What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-12 · 248 added, 244 removed, 164 unchanged (75% 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

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, 2023 that was filed with the SEC on April 16, 2024.

Certain information

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

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

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

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

Conduit Pharmaceuticals Limited entered into an Agreement and Plan of Merger (the “Merger Agreement”) with

Murphy Canyon Acquisition Corp.

(“MURF”) on November 8, 2022.

The transaction contemplated by the terms of the Merger

Agreement was completed on September 22, 2023 (the “Merger”), in conjunction with which MURF changed its name to Conduit Pharmaceuticals Inc.

(hereafter referred to, collectively with is subsidiaries as “Conduit”, the “Company”, “we”,

“us” or “our”, unless the context otherwise requires).

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the 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, 2023 that was filed with the SEC on April 16, 2024.

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.

Conduit Pharmaceuticals Limited

entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Murphy Canyon Acquisition Corp.

on November 8, 2022.

The transaction contemplated by the terms of the Merger Agreement was completed on September 22, 2023 (the “Merger”),

in conjunction with which MURF changed its name to Conduit Pharmaceuticals Inc.

(hereafter referred to, collectively with is subsidiaries

as “Conduit”, the “Company”, “we”, “us” or “our”, unless the context otherwise

has developed a unique business model that allows it to act as a “conduit” to bring clinical assets from pharmaceutical companies

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extend or develop proprietary solid-form intellectual property for our existing and future clinical assets.

Our own intellectual

property portfolio comprises a 20-year patent pending (in certain remaining jurisdictions) solid-form compound, the AZD1656

Cocrystal (a HK-4 Glucokinase Activator), targeting a wide range of autoimmune diseases.

Our pipeline research includes a number of

compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical

companies, which we have identified as having an opportunity to develop further intellectual property positions through solid-form

Our own intellectual property

portfolio comprises a 20-year patent pending (in certain remaining jurisdictions) solid-form compound, the AZD1656 Cocrystal (a HK-4

Glucokinase Activator), targeting a wide range of autoimmune diseases.

Our pipeline research includes a number of compounds that serve

as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which we have identified

as having an opportunity to develop further intellectual property positions through solid-form technology.

connection with the funding and development of clinical assets, we evaluate and select the specific molecules to be developed and collaborate

with external contract research organizations (“CROs”) and Key Opinion Leaders

(“KOLs”) to run clinical trials that are managed, funded, and overseen by us.

We intend to leverage our comprehensive

clinical and scientific expertise in order to facilitate development of clinical assets through Phase II trials in an efficient manner

by using CROs and third-party service providers.

We will also collaborate closely with disease specific KOLs to collectively assess and

determine the most appropriate indications for all our current and forthcoming assets.

with external contract research organizations (“CROs”) and Key Opinion Leaders (“KOLs”) to run clinical trials

that are managed, funded, and overseen by us.

We intend to leverage our comprehensive clinical and scientific expertise in order to facilitate

development of clinical assets through Phase II trials in an efficient manner by using CROs and third-party service providers.

also collaborate closely with disease specific KOLs to collectively assess and determine the most appropriate indications for all our

current and forthcoming assets.

believe that successful Phase II trials of the clinical assets in our pipeline will increase the value of our assets.

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portfolio in combination with other potential sources of financing, including debt or equity financing.

of our proprietary owned patented clinical assets, AstraZeneca AB (PUBL) (“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

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.

of our proprietary owned patented clinical assets, AstraZeneca AB (PUBL) (“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.

has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further

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data generated in these clinical trials to assess which clinical assets to further develop and for which indications.

this relationship, there are considerable active pharmaceutical ingredients (“APIs”) that were manufactured by AstraZeneca in conducting its clinical trials available.

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.

this relationship, there are considerable active pharmaceutical ingredients (“APIs”) that were manufactured by AstraZeneca

in conducting its clinical trials available.

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.

Conduit is well positioned to pursue, and intends, to pursue additional relationships and/or partnerships with third parties for the

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We plan to focus our efforts on developing clinical assets to address

diseases that impact a large population where there is no present treatment or the present treatment, carries significant unwanted

side effects.

diseases that impact a large population where there is no present treatment or the present treatment, carries significant unwanted side

Component of Result of Operations

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The prepaid amounts are expensed as the benefits are

incurred approximately $25,000 and $153,000 on research and development activities during the three and six months ended June 30, 2024, respectively.

There was no comparable research and development funding during the three and six months ended June 30, 2023.

Our research and development

activities have been wholly focused on developing co-crystals of AZD1656 to increase patent life.

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.

incurred approximately $3.1 million and $3.2 million on research and development activities during the three and nine months ended

September 30, 2024, respectively.

There was no comparable research and development funding during the three and nine months ended

September 30, 2023.

Of the costs incurred in 2024, $1.5 million was due to the upfront payment to AstraZeneca in connection with the

license agreement and $1.6 million was related to the shares issued to AstraZeneca.

Our research and development activities have been wholly focused on developing co-crystals of AZD1656 to

increase patent life.

Some of this work was completed by third-party CROs but all intellectual property is retained by us.

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

and Administrative Expenses

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

Three Months ended June 30,

Six Months ended June 30,

Three Months ended

September 30,

Nine Months ended

September 30,

(Dollar amounts in thousands)

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Total other (expense) income, net

of the Three Months Ended June 30, 2024 and 2023

of the Three Months Ended September 30, 2024 and 2023

and Development Expenses

Three Months ended June 30,

Three Months ended

September 30,

(Dollar amounts in thousands)

Research and development expenses

and development expenses increased by $25,000, or 100%, for the three months ended June 30, 2024, as compared to $0 for the three

months ended June 30, 2023.

The increase was primarily due to the development of certain co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075

- Patent Expires 02/09/2042) during the quarter ended June 30, 2024.

We will seek to develop the AZD1656 Co-Crystal in psoriasis, Crohn’s

disease, lupus, sarcoidosis, diabetic wound healing, idiopathic pulmonary fibrosis, and nonalcoholic steatohepatitis (“NASH”).

no comparative activity during the three months ended June 30, 2023.

and development expenses increased by $3.1 million, or 100%, for the three months ended September 30, 2024, as compared to $0 for

the three months ended September 30, 2023.

The increase was driven by the upfront payment made and shares issued to AstraZeneca in the third quarter of 2024 in

connection with the license agreement and issuance agreement, respectively.

and Administrative Expenses

Three Months ended June 30,

Three Months ended

September 30,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $1.8 million, or 137%, to $3.1 million for the three months ended June 30, 2024, as

compared to $1.3 million for the three months ended June 30, 2023.

The increase was primarily driven by a $1.1 million increase in

salaries and stock compensation expense, a $0.4 million increase in insurance related the amortization of D&O insurance, and

$0.3 million in professional fees and other general and administrative expenses.

and administrative expenses increased by $2.3 million, or 532%, to $2.7 million for the three months ended September 30, 2024, as compared

to $0.4 million for the three months ended September 30, 2023.

The increase was primarily driven by a $0.8 million increase in salaries

and stock compensation expense, a $0.4 million increase in insurance related the amortization of D&O insurance, and $1.0 million

in professional fees and other general and administrative expenses.

Income (Expense), Net

Three Months ended June 30,

Three Months ended

September 30,

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $1.3 million, or 169%, to $2.1 million of expense for the three months ended June 30, 2024, as

compared to $0.8 million of net expense for the three months ended June 30, 2023.

The increase was primarily driven by an increase

of $2.2 million related to the issuance of warrants in exchange for stockholders’ entering into lock-up agreements during the

three months ended June 30, 2024.

The $0.8 million expense for the three months ended June 30, 2023 was primarily driven by a

$1.0 million loss on the Vela option in the prior period offset by a, $0.2 million gain on the change in fair value of the Cizzle

further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of June 30, 2024

and June 30, 2023 included elsewhere in this document.

Three Months ended June 30,

income (expense), net changed by $(3.4) million, or (111)%, to $0.3 million of expense for the three months ended September 30,

2024, as compared to $3.1 million of net income for the three months ended September 30, 2023.

The decrease was primarily driven a

$0.4 million contingent liability incurred in the third quarter of 2024, a change in the fair value of the Cizzle option of $1.0

million, a fair value change for the Vela option of $0.7 million and $1.5 million derecognition of the Cizzle deferred revenue in

further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of September 30,

2024 and September 30, 2023 included elsewhere in this document.

Three Months ended

September 30,

(Dollar amounts in thousands)

Interest expense, net

expense was $0.1 million for the three months ended June 30, 2024 compared to $0 for the three months ended June 30, 2023.

was driven by $79,000 of interest expense on the deferred commission payable to an advisor for fees related to the Merger and $40,000 of interest expense for interest on convertible notes for the three months ended June 30, 2024.

of the Six Months Ended June 30, 2024 and 2023

expense, net increased by $(0.3) million, or 557%, to $0.3 million of interest expense for the three months ended September 30, 2024, as compared to

$47,000 of interest expense for the three months ended September 30, 2023.

The increase was driven by $0.1 million of interest expense

related to the amortization of debt discount, $0.1 million of interest expense on the deferred commission payable to an advisor

for fees related to the Merger and $0.1 million of interest expense for interest on convertible note and note payables for the three

months ended September 30, 2024.

of the Nine Months Ended September 30, 2024 and 2023

and Development Expenses

Six Months ended June 30,

Nine Months ended September 30,

(Dollar amounts in thousands)

Research and development expenses

and development expenses increased by $0.2 million, or 100%, for the six months ended June 30, 2024, as compared to $0 for the six months

ended June 30, 2023.

The increase was primarily due to the development of certain co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075

- Patent Expires 02/09/2042) during the quarter ended June 30, 2024.

We will seek to develop the AZD1656 Co-Crystal in psoriasis, Crohn’s

disease, lupus, sarcoidosis, diabetic wound healing, idiopathic pulmonary fibrosis, and NASH.

no comparative activity during the six months ended June 30, 2023.

and development expenses increased by $3.2 million, or 100%, for the nine months ended September 30, 2024, as compared to $0 for the

nine months ended September 30, 2023.

The increase was driven by the upfront payment made to and shares issued to AstraZeneca in the third quarter of 2024 in

connection with the license agreement and issuance agreement, respectively.

The remaining increase was due to the development of

certain co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075 - Patent Expires 02/09/2042) during the nine months ended

September 30, 2024.

There was no comparative activity during the nine months ended September 30,

and Administrative Expenses

Six Months ended June 30,

Nine Months ended

September 30,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $3.1 million, or 115%, to $5.9 million for the six months ended June 30, 2024, as compared to

$2.8 million for the six months ended June 30, 2023.

The increase was primarily driven by a $2.0 million increase in salaries and stock

compensation expense, $0.9 million increase in insurance related the amortization of D&O insurance, and a $0.2 million in professional

fees and other general and administrative expenses.

and administrative expenses increased by $5.8 million, or 206%, to $8.6 million for the nine months ended September 30, 2024, as

compared to $2.8 million for the nine months ended September 30, 2023.

The increase was primarily driven by a $2.9 million increase

in salaries and stock compensation expense, $1.3 million increase in insurance related the amortization of D&O insurance, $0.3 million of advertising and marketing expenses, $0.2 million of board of directors’ fees, $0.2 million

increases in rent expenses, a $0.5 million other general and administrative expenses, and $0.5 million increase in professional fees and travel expense.

Income (Expense), Net

Six Months ended June 30,

Nine Months ended

September 30,

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $1.7 million, or 176%, to $2.6 million of expense for the six months ended June 30, 2024, as

compared to $0.9 million of net expense for the six months ended June 30, 2023.

The increase was primarily driven by an increase of

$2.7 million related to the issuance of warrants in exchange for stockholders’ entering into lock-up agreements during the

six months ended June 30, 2024.

The $0.9 million expense for the six months ended June 30, 2023 was primarily driven by a $0.3

million change in fair value on the convertible notes payable, a loss on the Vela option of $0.9 million, offset by a gain on the

change in fair value of the Cizzle option of $0.3 million.

further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of June 30, 2024

and June 30, 2023 included elsewhere in this document.

Six Months ended June 30,

income (expense), net changed by $(5.1) million, or (238)%, to $2.9 million of net expense for the nine months ended September 30,

2024, as compared to $2.1 million of net income for the nine months ended September 30, 2023.

The increase was primarily driven by

an increase of $2.7 million related to the issuance of warrants in exchange for stockholders entering into lock-up agreements and a

$0.4 million contingent liability incurred during the nine months ended September 30, 2024.

The $2.1 million income for the nine

months ended September 30, 2023 was driven by a change in the fair value of the Cizzle option of $1.3 million, a fair value change

for the Vela option of $0.7 million and $1.5 million derecognition of the Cizzle deferred revenue in 2023, offset by a loss on the

issuance of the Vela option of $1.0 million.

further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of September 30,

2024 and September 30, 2023 included elsewhere in this document.

Nine Months ended

September 30,

(Dollar amounts in thousands)

Interest expense, net

expense was $0.2 million for the six months ended June 30, 2024 compared to $0 for the six months ended June 30, 2023.

The change was

driven by $0.2 million of interest expense on the deferred commission payable to an advisor for fees related to the Merger and $80,000 of interest expense for interest on convertible notes for the six months ended June 30, 2024.

expense increased by $(0.5) million, or 495%, to $0.5 million of net expense for the nine months ended September 30, 2024, as compared to

$92,000 of net expense for the nine months ended September 30, 2023.

The change was driven by $0.1 million of interest expense related

to the amortization of debt issuance costs, $0.2 million of interest expense on the deferred commission payable to an advisor for fees

related to the Merger and $0.2 million of interest expense for interest on convertible note and note payables for the three months ended

September 30, 2024.

and Capital Resources

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been through private placements of equity securities and convertible debt as well as PIPE financing as a result of the Merger.

the six months ended June 30, 2024 and 2023, we had net losses of $8.9 million and $3.8 million, respectively.

the nine months ended September 30, 2024 and 2023, we had net losses of $15.4 million and $0.8 million, respectively.

expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development

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primary uses of cash are to fund our operations as we continue to develop our product candidates.

We will require a significant amount of cash for

expenditures as we invest in ongoing research and development and business operations.

Until such time as we can generate significant

revenue from commercialization or licensing, we expect to finance our cash needs for ongoing research and development and business

operations through public or private equity or debt financings or other capital sources, including strategic partnerships.

may be unable to raise additional funds or enter into such other arrangements, when needed, on favorable terms or at all.

We will require a significant amount

of cash for expenditures as we invest in ongoing research and development and business operations.

Until such time as we can generate

significant revenue from commercialization or licensing, we expect to finance our cash needs for ongoing research and development and

business operations through public or private equity or debt financings or other capital sources, including strategic partnerships.

we may be unable to raise additional funds or enter into such other arrangements, when needed, on favorable terms or at all.

To the extent

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Convertible Note

March 2023, we issued an aggregate principal amount of $0.8 million convertible promissory note payable to an investor.

promissory convertible note matures and is payable in full, 18 months from the date of the note.

The note carries 20% interest and

is payable every six months from the date of the note until the maturity date.

The notes became convertible into shares

Conduit’s common stock following the consummation of the Merger.

March 2023, we issued an aggregate principal amount of $0.8 million convertible promissory note (the “March 2023 Convertible

Note”) payable to an investor.

March 2023 Convertible Note originally was to mature and become payable in full, 18 months from the date of the March 2023

Convertible Note.

The March 2023 Convertible Note carries 20% interest per annum and interest is payable every six months from the

date of the March 2023 Convertible Note until the maturity date.

The March 2023 Convertible Note became convertible into Common Stock following the consummation of the Merger.

On October 9, 2024, the Company executed an agreement to extend the maturity date for the March 2023 Convertible Note.

The March 2023 Convertible Note’s maturity date is

currently November 19, 2024.

For additional information regarding our convertible promissory note, see Note 7 of the notes to the unaudited financial

May 2022, we entered into two loan agreements, with an aggregate principal amount of $0.2 million, with two lenders.

loans payable mature and is payable in full two years from the date of the agreement and bear no interest.

additional information regarding our convertible promissory note, see Note 7 of the note to the unaudited financial statements.

currently anticipate that cash required for working capital for the next 12 months is approximately $17.1 million, which includes deferred

financing fees payable of $5.7 million, accrued expenses and other current liabilities of $1.7 million, a convertible promissory note,

if not converted prior to maturity, of $0.8 million, and a note payable of $0.2 million that matures

within the next 12 months.

We do not anticipate being able to fund required capital expenditures for the next 12 months with cash and

cash equivalents on hand as we have a history of limited cash on hand.

We have historically been able to access funds through the issuance

of our convertible notes and believe we can continue to obtain funding through debt and equity financing agreements as needed to meet

cash requirements for the next 12 months.

loans payable were to mature and become payable in full two years from the date of the loan agreement and they bear no interest.

October 9, 2024, the Company executed agreements to extend the loan maturity date for each loan to December 19, 2024.

August 2024, we entered into a senior secured promissory note with an aggregate principal amount of $2.7 million with one lender.

The note matures

and is payable in full, 12 months from the date of the note.

The note bears interest at the rate of 12% per annum and interest is

payable monthly in arrears as cash or accrued at the lender’s discretion from the date of the note until the maturity date.

additional information regarding our loans payable note, see Note 8 of the notes to the unaudited financial statements.

currently anticipate that cash required for working capital for the next 12 months is approximately $13.7 million, which

includes deferred financing fees payable of $5.7 million, accrued expenses and other current liabilities of $3.2 million, a

convertible promissory note, if not converted prior to maturity, of $0.8 million, notes payable of $0.2 million, and a note payable

of $2.7 million.

We do not anticipate being able to fund required capital expenditures for the next 12 months with cash and cash

equivalents on hand as we have a history of limited cash on hand.

We have historically been able to access funds through the

issuance of our convertible notes and believe we can continue to obtain funding through debt and equity financing agreements as

needed to meet cash requirements for the next 12 months.

following table set forth our cash flows for the period indicated (in thousands):

Six Months ended June 30,

Nine Months ended September 30,

Net cash (used in) provided by:

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Flows Used in Operating Activities

cash used in operating activities for the six months ended June 30, 2024, was $3.9 million, resulting primarily from a net loss of

$8.9 million and a change in the fair value of warrants of $0.1 million, adjusted for non-cash items including $0.9 million of

stock-based compensation, $0.9 million of amortization expense, $2.7 million expense on the issuance of warrants, $0.2 million

interest expense of the deferred commission payable, $0.2 million non-cash share issuance and a $0.4 million cash inflow from

operating assets and liabilities.

The $0.4 million cash inflow from operating assets and liabilities is primarily due to a $0.8

million cash inflow from accounts payable, partially offset by a $0.1 million cash outflow from accrued expenses and other current

liabilities and a $0.3 million cash outflow from prepaid expenses.

cash used in operating activities for the six months ended June 30, 2023, was $2.4 million, resulting primarily from a net loss of $3.8

million, adjusted for non-cash charges of $0.3 million for a loss on the change in fair value of convertible notes payable, a $0.3 million

loss change in reserve on a related party loan, and a $0.6 million loss on the change in fair value of the Cizzle option.

The $0.1 million

cash inflow from operating assets and liabilities is primarily due to a $1.0 million cash inflow from accrued expense and other current

liabilities due to differences in the timing of disbursements and a $0.9 million cash outflow from prepaid expenses.

Flows (Used) Provided by Investing Activities

Net cash used in investing activities for the six months ended June 30, 2024, resulted from net purchases of short

term investments of $0.2 million and purchases of PP&E during the year.

cash used in investing activities for the six months ended June 30, 2023, was $0.3 million, resulting from the issuance of a loan to

a related party of $0.03 million and proceeds on issuance of an option of $0.5 million.

cash used in operating activities for the nine months ended September 30, 2024, was $5.9 million, resulting primarily from a net loss

of $15.1 million, net a change in the fair value of warrants of $0.1

million, adjusted for non-cash items including $1.3 million of stock-based compensation, $1.3 million of amortization expense, $2.7 million

expense on the issuance of warrants, $0.2 million interest expense of the deferred commission payable, $1.7 million non-cash share issuance

and a $1.4 million cash inflow from operating assets and liabilities.

The $2.3 million cash inflow from operating assets and liabilities

is primarily due to a $2.5 million cash inflow from accounts payable and accrued expenses and other current liabilities and a $0.2 million

cash outflow from prepaid expenses.

cash used in operating activities for the nine months ended September 30, 2023 was $2.9 million, resulting primarily from a net loss

of $0.8 million, adjusted for non-cash items including a $1.5 million reduction of deferred income upon exercise of the Cizzle option,

a $2.0 million gain on the change in fair value of the Vela and Cizzle options, a $0.2 million change from the reversal of a reserve

for an uncollectible loan that was repaid in September 2023 and a $0.1 million gain on warrant remeasurement, partially offset by a $1.7

million cash inflow from net changes from operating assets and liabilities, a $1.0 million loss on issuance of the Vela option, a $0.4

million loss on change in fair value of convertible notes and a $0.1 million increase in interest expense on a convertible promissory

The $0.2 million cash inflow from operating assets and liabilities is primarily due to a $1.6 million cash inflow from accrued

expense and other current liabilities due to differences in the timing of disbursements and a $1.4 million cash outflow from prepaid

Flows (Used in) Provided by Investing Activities

cash used in investing activities for the nine months ended September 30, 2024, was $0.1 million, resulting from $0.5 million purchases of

short term investments offset by $0.4 million in sales of short term investments.

cash provided by investing activities for the nine months ended September 30, 2023, was $0.2 million, resulting proceeds on the

issuance of an option of $0.6 million offset by the issuance of a loan to a related party of $0.4 million.

Flows Provided by Financing Activities

cash provided by financing activities for the six months ended June 30, 2024, was $0.1 million, resulting from the proceeds on the issuance

of the April 2024 warrants.

cash provided by financing activities for the six months ended June 30, 2023, was $2.7 million, resulting from the issuance of a convertible

note payable of $1.4 million and $0.7 million from the issuance of a convertible promissory note

cash provided by financing activities for the nine months ended September 30, 2024, was $1.9 million, resulting from $1.6 million of

proceeds on the issuance of the promissory note to Nirland, $0.1 million of proceeds the issuance of the April 2024 warrants and a

$0.1 million bank overdraft.

cash provided by financing activities for the nine months ended September 30, 2023, was $11.3 million, resulting from the issuance of

a convertible note payable of $1.4 million and from the issuance of a convertible promissory note payable of $0.7 million.

Obligations and Other Commitments

of June 30, 2024, we had no non-cancellable commitments for the purchase of clinical materials, contract manufacturing, maintenance and

committed funding which we expect to pay within one year.

of September 30, 2024, we had no non-cancellable commitments for the purchase of clinical materials, contract manufacturing, maintenance

and committed funding which we expect to pay within one year.

Accounting Estimates

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financial results include the following:

Value Measurements

Topic 820, Fair Value Measurements and Disclosures , defines fair value, establishes a framework for measuring fair value, and

expands disclosures about fair value measurements.

Fair value is to be determined based on the exchange price that would be received

for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability

in an orderly transaction between market participants.

In determining fair value, the Company used various valuation approaches.

value hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes

the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are those that

market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed

based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels, based on the

inputs, as follows:

1-Valuations based on quoted prices for identical instruments in active markets.

Since valuations are based on quoted prices that

are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.

2- Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments

in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose inputs or significant

value drivers are observable or can be corroborated by observable market data.

3-Valuations based on inputs that are unobservable.

These valuations require significant judgment.

Company’s Level 1 assets consist of cash and cash equivalents in the accompanying balance sheets and the value of accrued expenses

and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.

The Company determines the accounting

classification of warrants as either liability or equity by first assessing whether the warrants meet liability classification in accordance

with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”).

Under ASC 480, a financial instrument that embodies an unconditional

obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or

may settle by issuing a variable number of its equity shares must be classified as a liability (or an asset in some circumstances) if,

at inception, the monetary value of the obligation is based solely or predominantly on any one of the following:

(a) a fixed monetary

amount known at inception;

(b) variations in something other than the fair value of the issuer’s equity shares;

or (c) variations

inversely related to changes in the fair value of the issuer’s equity shares.

If financial instruments, such as the warrants, are

not required to be classified as liabilities under ASC 480, the Company assesses whether such instruments are indexed to the Company’s

own stock under ASC 815-40.

In order for an instrument to be considered indexed to an entity’s own stock, its settlement amount

must always equal the difference between the following:

(a) the fair value of a fixed number of the Company’s equity shares, and

(b) a fixed monetary amount or a fixed amount of a debt instrument issued by the Company.

Equity classified warrants are

recorded in stockholders’ deficit and liability classified warrants are recorded as liabilities within the Consolidated Balance

The liability classified warrants are remeasured each period with changes recorded in the Consolidated Statements of Operations

and Comprehensive Loss.

As of June 30, 2024, the Company

had outstanding warrants that are classified as a liability within the condensed consolidated balance sheets.

The fair value of the warrant

liability is determined each balance sheet date based on Level 2 inputs as such inputs are based on observable inputs other than quoted

The warrant liability is valued using a Black-Scholes model, with the most judgmental non-observable input being the volatility

Changes in the assumptions around the volatility can cause significant changes in the estimated fair value of the warrant liability.

See Note 4 for further information on the Company’s financial liabilities carried at fair value.

During the sixth months ended June 30, 2024, the Company issued warrants that met the criteria to be classified within

stockholders’ deficit within the condensed consolidated balance sheets.

The fair value of the warrants was determined by using a

Black-Scholes model, with the most judgmental non-observable input being the volatility measure.

Changes in the assumptions around the

volatility could have caused significant changes in the estimated fair value of the warrants.

See Note 14 for further information on the

warrants classified within stockholders’ deficit.

Share Based Compensation

The Company accounts for share based compensation arrangements granted

to employees in accordance with ASC 718, Compensation:

Stock Compensation, by measuring the grant date fair value

of the award and recognizing the resulting expense over the period during which the employee is required to perform service in exchange

for the award.

The grant date fair value of stock options is determined using a Black-Scholes model, with the most judgmental non-observable

input being the volatility measure.

Changes in the assumptions around the volatility can cause significant changes in the grant date fair

value of stock options.

Company determines the accounting classification of warrants as either liability or equity by first assessing whether the warrants meet

liability classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”).

Under ASC 480, a

financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies

a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares must be classified as

a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly

on any one of the following:

(a) a fixed monetary amount known at inception;

(b) variations in something other than the fair value of

the issuer’s equity shares;

or (c) variations inversely related to changes in the fair value of the issuer’s equity shares.

If financial instruments, such as the warrants, are not required to be classified as liabilities under ASC 480, the Company assesses

whether such instruments are indexed to the Company’s own stock under ASC 815-40.

In order for an instrument to be considered indexed

to an entity’s own stock, its settlement amount must always equal the difference between the following:

(a) the fair value of a

fixed number of the Company’s equity shares, and (b) a fixed monetary amount or a fixed amount of a debt instrument issued by the

classified warrants are recorded in stockholders’ deficit and liability classified warrants are recorded as liabilities within

the Consolidated Balance Sheets.

The liability classified warrants are remeasured each period with changes recorded in the Consolidated

Statements of Operations and Comprehensive Loss.

of September 30, 2024, the Company had outstanding warrants that are classified as a liability within the condensed consolidated balance

The fair value of the warrant liability is determined each balance sheet date based on Level 2 inputs as such inputs are based

on observable inputs other than quoted prices.

The warrant liability is valued using a Black-Scholes model, with the most judgmental

non-observable input being the volatility measure.

Changes in the assumptions around the volatility can cause significant changes in

the estimated fair value of the warrant liability.

See Note 4 for further information on the Company’s financial liabilities carried

at fair value.

the nine months ended September 30, 2024, the Company issued warrants that met the criteria to be classified within stockholders’

deficit within the condensed consolidated balance sheets.

The fair value of the warrants was determined by using a Black-Scholes model,

with the most judgmental non-observable input being the volatility measure.

Changes in the assumptions around the volatility could have

caused significant changes in the estimated fair value of the warrants.

See Note 14 for further information on the warrants classified

within stockholders’ deficit.

Based Compensation

Company accounts for share based compensation arrangements granted to employees in accordance with ASC 718, Compensation:

Stock Compensation,

by measuring the grant date fair value of the award and recognizing the resulting expense over the period during which the employee is

required to perform service in exchange for the award.

The grant date fair value of stock options is determined using a Black-Scholes

model, with the most judgmental non-observable input being the volatility measure.

Changes in the assumptions around the volatility can

cause significant changes in the grant date fair value of stock options.

The Company accounts for forfeitures when they occur.

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the new or revised accounting pronouncements as of public company effective dates.

closing of the Merger, the surviving company remained an emerging growth company, as defined by the JOBS Act until the earliest of

(i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s

initial public offering, (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at

least $1.235 billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer,

which means the market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0 million as of

the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt

securities during the prior three year period.

closing of the Merger, the surviving company remained an emerging growth company, as defined by the JOBS Act until the earliest of (i)

the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s initial

public offering, (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at least $1.235

billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer, which means the

market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0 million as of the prior December

31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt securities during the prior

three year period.

addition, Conduit is a smaller reporting company as defined in the Exchange Act.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis