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Share Based Compensation
 3 Months Ended
Mar. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Share Based Compensation

8. Share Based Compensation

 

On September 22, 2023, in connection with the Merger, the Company adopted the Conduit Pharmaceuticals Inc. 2023 Stock Incentive Plan (the “2023 Plan”). The 2023 Plan became effective upon the closing of the Merger. The 2023 Plan initially provided for the issuance of up to 114,976 shares of Common Stock. Pursuant to the 2023 Plan’s “evergreen” provision, on February 6, 2025 and January 10, 2024, the Company increased the number of shares of Common Stock available for issuance under the 2023 Plan by 69,240 and 36,914 shares, respectively. The number of authorized shares will automatically increase on January 1, 2026 and continuing annually on each anniversary thereof through (and including) January 1, 2033, equal to the lesser of (i) 5% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of common stock as determined by the Board or the applicable committee of the Board. The 2023 Plan allows for awards to be issued to employees and non-employee directors in the form of options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance stock units, dividend equivalents, other stock-based, or other cash-based awards. As of March 31, 2025, there were 154,544 shares of Common Stock available for issuance under the 2023 Plan.

 

On March 30, 2025, certain non-employee directors elected to receive their unpaid cash retainers due as of March 31, 2025, and cash retainers owed for the period from April 1, 2025 to June 30, 2025, under the Director Compensation Program, in the form of fully vested shares of Common Stock. In total, $0.1 million of unpaid retainers was settled through the issuance 155,257 unregistered shares of Common Stock (the “Retainer Shares”). The Company recorded the Retainer Shares at their fair value, as determined by intraday share prices of the Company’s Common Stock on March 31, 2025. The fair value of the shares issued for cash retainers due as of March 31, 2025, $78,000, was recorded within general & administration expense in the condensed consolidated statement of operations and comprehensive loss. The fair value of the shares issued for cash retainers owed for the period from April 1, 2025 to June 30, 2025, $58,000, was recorded as a prepaid expense in the condensed consolidated balance sheets.

 

Restricted Stock

 

No RSU’s or shares of restricted common stock were granted during the three months ended March 31, 2025 and March 31, 2024. There were 745 shares of restricted common stock vested as of March 31, 2025 and no RSUs vested as of March 31, 2024.

 

 

Stock Options

 

The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company then recognizes the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:

 

  ● Expected volatility – the Company estimates the volatility of the share price of their peer companies at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility.
  ● Expected term – the Company estimates the expected term using the “simplified” method outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.”
  ● Risk-free interest rate – the Company estimates the risk- free interest rate using the U.S. Treasury Yield curve for periods equal to the expected term of the options in effect at the time of grant.
  ● Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend.

 

The Company did not grant stock options during the three months ended March 31, 2025 or March 31, 2024.

 

The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.

 

The following table summarizes stock option activity for the 2023 Plan:

 

   Number of Options   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term (years)  

Aggregate

Intrinsic Value (in thousands)

 
Outstanding at December 31, 2024   65,509   $81.52    9.72   $- 
Granted   -   $-    -   $- 
Cancelled/forfeited   (419)  $551    -   $- 
Exercised   -   $-    -   $- 
Outstanding at March 31, 2025   65,090   $78.49    9.24   $- 
Exercisable   22,735   $75.57    9.48   $- 
Unvested   42,355   $84.68    9.10   $- 

 

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of March 31, 2025, the total compensation cost related to non-vested option awards not yet recognized was $2.0 million with a weighted average remaining vesting period of 1.64 years.

 

For the three months ended March 31, 2025 and March 31, 2024, there was a total of $0.2 million and $0.4 million, respectively in stock-based compensation expense recognized within General and Administrative expenses on the condensed consolidated statements of operations and comprehensive loss, respectively.