[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Financial Statements](index=6&type=section&id=Item%201.%2E%20Unaudited%20Condensed%20Financial%20Statements) This section presents the unaudited condensed financial statements for Spruce Biosciences, Inc., including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's organization, accounting policies, financial instruments, and significant agreements [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $16,387 | $38,753 | | Total current assets | $20,953 | $44,206 | | Total assets | $21,820 | $45,209 | | LIABILITIES (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current liabilities | $8,060 | $15,246 | | Total liabilities | $8,640 | $16,388 | | Total stockholders' equity | $13,180 | $28,821 | [Condensed Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $— | $1,610 | $— | $3,612 | | Total operating expenses | $2,692 | $11,646 | $17,184 | $26,281 | | Loss from operations | $(2,692) | $(10,036) | $(17,184) | $(22,669) | | Net loss and comprehensive loss | $(2,067) | $(9,181) | $(16,108) | $(20,806) | | Net loss per share, basic and diluted | $(3.50) | $(16.73) | $(27.36) | $(37.94) | [Condensed Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Statements%20of%20Stockholders%27%20Equity) - Total stockholders' equity decreased from **$28,821 thousand** as of January 1, 2025, to **$13,180 thousand** as of June 30, 2025, primarily due to a net loss of **$16,108 thousand**[15](index=15&type=chunk) - Stock-based compensation for the six months ended June 30, 2025, was **$467 thousand**, a decrease from **$3,247 thousand** in the same period of 2024[15](index=15&type=chunk)[16](index=16&type=chunk) [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(21,555) | $(26,064) | | Net cash used in financing activities | $(811) | $(592) | | Net decrease in cash, cash equivalents, and restricted cash | $(22,366) | $(26,656) | | Cash, cash equivalents, and restricted cash at end of period | $16,422 | $69,718 | [Notes to the Unaudited Condensed Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Financial%20Statements) [1. Organization and Principal Activities](index=11&type=section&id=1.%2E%20Organization%20and%20Principal%20Activities) - Spruce Biosciences, Inc. is a late-stage biopharmaceutical company focused on developing and commercializing novel therapies for neurological disorders[22](index=22&type=chunk) - The company's common stock was delisted from Nasdaq on April 29, 2025, due to non-compliance with the minimum bid price requirement and began trading on the OTCQB under 'SPRBD' after a **1:75 reverse stock split** effective August 7, 2025[23](index=23&type=chunk)[24](index=24&type=chunk) - A workforce reduction of **55%** was effected on April 21, 2025, to prioritize the development of tralesinidase alfa enzyme replacement therapy for Sanfilippo Syndrome Type B, incurring **$0.9 million** in operating expenses for the three months ended June 30, 2025[27](index=27&type=chunk) - The company incurred a net loss of **$16.1 million** and used **$21.6 million** cash in operations for the six months ended June 30, 2025, resulting in an accumulated deficit of **$266.4 million**; cash and cash equivalents of **$16.4 million** as of June 30, 2025, are insufficient to fund operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern[28](index=28&type=chunk)[29](index=29&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%2E%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting rules, with certain notes condensed or omitted[31](index=31&type=chunk) - The company operates as one reportable segment, focusing on developing and commercializing novel therapies for neurological disorders[38](index=38&type=chunk) - As an emerging growth company, Spruce Biosciences has elected to use the extended transition period for complying with new or revised accounting standards until December 31, 2025, or earlier if it loses emerging growth company status[41](index=41&type=chunk) [3. Fair Value Measurements](index=15&type=section&id=3.%2E%20Fair%20Value%20Measurements) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Cash equivalents: Money market funds | $15,814 | $37,802 | | Warrant liability | $129 | $— | - The warrant liability, valued using a Black-Scholes option pricing model, was **$129 thousand** as of June 30, 2025, reflecting a change in fair value of **$(619) thousand** for the period[50](index=50&type=chunk)[52](index=52&type=chunk) [4. Balance Sheet Components](index=17&type=section&id=4.%2E%20Balance%20Sheet%20Components) | Accrued Expenses and Other Current Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Accrued research and development expenses | $4,287 | $10,635 | | Accrued general and administrative expenses | $483 | $529 | | Accrued compensation and benefits | $817 | $882 | | Warrant liability | $129 | $— | | Accrued final payment on term loan | $294 | $— | | Lease liabilities, current portion | $300 | $283 | | Total accrued expenses and other current liabilities | $6,310 | $12,329 | [5. Leases](index=17&type=section&id=5.%2E%20Leases) - The company leases office space in South San Francisco under a non-cancelable operating lease expiring in February 2028[55](index=55&type=chunk) [6. Term Loan](index=17&type=section&id=6.%2E%20Term%20Loan) - The Term Loan with Silicon Valley Bank, initially **$4.5 million**, was amended to **$30.0 million** (First Tranche **$20.0 million**, Second Tranche **$10.0 million** which expired); the loan matures on January 1, 2026[56](index=56&type=chunk)[58](index=58&type=chunk) - As of June 30, 2025, the carrying value of the Term Loan was **$0.9 million**, with a stated interest rate of **8.0%**[60](index=60&type=chunk)[61](index=61&type=chunk) | Year ending December 31, | Future Payments (in thousands) | | :----------------------- | :----------------------------- | | 2025 (remaining 6 months) | $836 | | 2026 | $136 | | Total | $972 | | Less: interest | $(26) | | Less: unamortized debt issuance costs | $(3) | | Term loan, current portion | $943 | [7. License and Purchase Agreements](index=19&type=section&id=7.%2E%20License%20and%20Purchase%20Agreements) - The company has a license agreement with Eli Lilly and Company for CRF1 receptor antagonist compounds, requiring up to **$23.0 million** in milestones and tiered royalties[66](index=66&type=chunk)[67](index=67&type=chunk) - Under the Kaken License Agreement, the company granted exclusive rights for tildacerfont in Japan, receiving a **$15.0 million** upfront payment in April 2023 and eligible for up to **$65.0 million** in milestones and double-digit royalties; the full transaction price was recognized as of December 31, 2024[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - A collaboration with HMNC Holding GmbH was formed in May 2024 to fund a Phase 2 study of tildacerfont in MDD patients using a genetic selection tool, with topline results anticipated in H1 2026[72](index=72&type=chunk)[73](index=73&type=chunk)[238](index=238&type=chunk) - In October 2024, the company acquired intellectual property and inventory related to Allievex's product candidates for **$5.0 million**, assuming up to **$88.0 million** in development/regulatory milestones and **$100.0 million** in sales milestones to BioMarin, plus tiered royalties[75](index=75&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) - An antibody license agreement with Twist Bioscience Corporation was entered in December 2024, with a **$0.5 million** payment recognized as R&D expense; the exercise period for the Twist Option was extended to December 2025[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - A collaboration and license agreement with HBM Alpha Therapeutics, Inc. in January 2025 involved a **$5.0 million** upfront payment and issuance of pre-funded warrants, recognized as R&D expense; the company is obligated to pay up to **$390.0 million** in milestones and tiered royalties[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [8. Capital Structure](index=23&type=section&id=8.%2E%20Capital%20Structure) - As of June 30, 2025, the company had **563,042 shares** of common stock outstanding, with **200,000,000 shares** authorized[10](index=10&type=chunk)[90](index=90&type=chunk) | Common Stock Reserved for Future Issuance | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Common stock warrants, issued and outstanding | 197,249 | 169,154 | | Stock options, issued and outstanding | 42,907 | 46,122 | | Restricted stock units, issued and outstanding | 25,512 | 29,880 | | Shares available for future issuance under 2020 Equity Incentive Plan | 63,295 | 27,558 | | Shares available for future issuance under 2020 Employee Stock Purchase Plan | 18,016 | 12,386 | | Total shares reserved | 346,979 | 285,100 | - One share of Series A Preferred Stock was issued on May 28, 2025, with **22,000,000 votes** solely on reverse stock split proposals, and was redeemed for **$100.00** on July 22, 2025, following stockholder approval of the reverse stock split[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) [9. Stock-Based Compensation Expense](index=24&type=section&id=9.%2E%20Stock-Based%20Compensation%20Expense) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $(424) | $684 | $(298) | $1,263 | | General and administrative | $347 | $1,001 | $765 | $1,984 | | Total stock-based compensation expense | $(77) | $1,685 | $467 | $3,247 | [10. Net Loss Per Share](index=24&type=section&id=10.%2E%20Net%20Loss%20Per%20Share) | (in thousands, except share and per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,067) | $(9,181) | $(16,108) | $(20,806) | | Weighted-average shares of common stock outstanding | 591,137 | 548,789 | 588,653 | 548,344 | | Net loss per share, basic and diluted | $(3.50) | $(16.73) | $(27.36) | $(37.94) | - Basic and diluted net loss per share were the same for all periods due to the anti-dilutive effect of potentially dilutive securities[97](index=97&type=chunk) [11. Related Party Transactions](index=25&type=section&id=11.%2E%20Related%20Party%20Transactions) - The company recognized **$0.3 million** in compensation expense during the six months ended June 30, 2025, for Kirk Ways, M.D., a Board member serving as interim Chief Medical Officer[99](index=99&type=chunk) [12. Subsequent Events](index=25&type=section&id=12.%2E%20Subsequent%20Events) - The **1:75 reverse stock split** became effective on August 7, 2025, with trading on OTCQB under 'SPRBD'[100](index=100&type=chunk) - The Series A Preferred Stock was redeemed on July 22, 2025, for **$100.00** following stockholder approval of the reverse stock split[101](index=101&type=chunk) - The Twist Antibody License Agreement was amended in July 2025 to extend the exercise period for the Twist Option to December 2025[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting significant losses, liquidity challenges, and strategic shifts towards developing tralesinidase alfa (TA-ERT); it also details the impact of the reverse stock split, material agreements, and changes in revenue and expenses [Overview](index=26&type=section&id=Overview) - Spruce Biosciences is a late-stage biopharmaceutical company focused on neurological disorders, with a recent shift in focus to tralesinidase alfa (TA-ERT) development since November 2024[107](index=107&type=chunk)[108](index=108&type=chunk) - The company has incurred significant net losses since inception, with **$16.1 million** for the six months ended June 30, 2025, and an accumulated deficit of **$266.4 million**, expecting continued losses[109](index=109&type=chunk) - Cash and cash equivalents of **$16.4 million** as of June 30, 2025, are insufficient to fund operations for the next 12 months, indicating substantial doubt about the company's ability to continue as a going concern[111](index=111&type=chunk) - Pursue regulatory approval of TA-ERT in patients with MPSIIIB[111](index=111&type=chunk)[123](index=123&type=chunk) - Build a specialized commercial organization for TA-ERT in the United States[111](index=111&type=chunk)[123](index=123&type=chunk) - Advance TA-ERT through a planned confirmatory study in MPSIIB and expanded access programs[111](index=111&type=chunk)[123](index=123&type=chunk) - Expand manufacturing capacity for TA-ERT[111](index=111&type=chunk)[123](index=123&type=chunk) - Advance clinical development of tildacerfont in major depressive disorder (MDD)[111](index=111&type=chunk)[123](index=123&type=chunk) - Advance pre-clinical and clinical development of SPR202 in congenital adrenal hyperplasia (CAH)[111](index=111&type=chunk)[123](index=123&type=chunk) - Implement operational, financial, and management information systems[111](index=111&type=chunk)[123](index=123&type=chunk) - Hire additional personnel[111](index=111&type=chunk)[123](index=123&type=chunk) - Obtain, maintain, expand, and protect intellectual property portfolio[111](index=111&type=chunk)[123](index=123&type=chunk) [Reverse Stock Split](index=28&type=section&id=Reverse%20Stock%20Split) - A **one-for-seventy-five (1:75) reverse stock split** was effected, with common stock trading on the OTCQB under 'SPRBD' since August 7, 2025; the company aims to resume trading on Nasdaq Capital Market by complying with the minimum bid price requirement[115](index=115&type=chunk)[116](index=116&type=chunk) [Material Agreements](index=28&type=section&id=Material%20Agreements) - The Term Loan with Silicon Valley Bank, initially **$4.5 million**, was increased to **$30.0 million** (First Tranche **$20.0 million**, Second Tranche **$10.0 million** which expired); as of June 30, 2025, **$0.9 million** principal was outstanding[118](index=118&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk) - The loan matures on January 1, 2026, with a floating interest rate (greater of **0.50%** above Prime Rate or **3.75%**) and includes a **$0.3 million** Supplemental Final Payment[119](index=119&type=chunk)[122](index=122&type=chunk)[125](index=125&type=chunk) [Components of Results of Operations](index=30&type=section&id=Components%20of%20Results%20of%20Operations) - All revenue to date has been from the Kaken License Agreement, with no product revenue generated from commercial sales[126](index=126&type=chunk)[127](index=127&type=chunk) - Operating expenses are categorized into research and development (R&D) and general and administrative (G&A); R&D expenses are primarily for advancing tildacerfont and acquiring/developing TA-ERT, expected to increase significantly[128](index=128&type=chunk)[129](index=129&type=chunk) - G&A expenses include personnel costs, legal fees, professional fees, and public company compliance costs, also expected to increase[131](index=131&type=chunk)[133](index=133&type=chunk) - Interest and other income, net, includes interest earned on cash and cash equivalents and changes in the fair value of warrant liability[135](index=135&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $— | $1,610 | $— | $3,612 | | Research and development | $(430) | $8,090 | $10,407 | $18,407 | | General and administrative | $3,122 | $3,556 | $6,777 | $7,874 | | Net loss | $(2,067) | $(9,181) | $(16,108) | $(20,806) | - Collaboration revenue decreased by **$1.6 million** (3 months) and **$3.6 million** (6 months) as the full transaction price from the Kaken License Agreement was recognized by December 31, 2024[137](index=137&type=chunk)[138](index=138&type=chunk) - Research and development expenses decreased by **$8.5 million** (3 months) and **$8.0 million** (6 months) primarily due to decreased tildacerfont CAH development activities and reductions in Allievex acquisition liabilities, partially offset by SPR202 acquisition costs[139](index=139&type=chunk)[141](index=141&type=chunk) - General and administrative expenses decreased by **$0.4 million** (3 months) and **$1.1 million** (6 months) mainly due to lower stock-based compensation expense[142](index=142&type=chunk)[144](index=144&type=chunk) - Interest and other income, net, decreased by **$0.3 million** (3 months) and **$0.9 million** (6 months) due to lower interest income from money market funds, partially offset by a gain from the decrease in warrant liability fair value[145](index=145&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - The company had **$16.4 million** in cash and cash equivalents as of June 30, 2025, down from **$38.8 million** at December 31, 2024; this is insufficient to fund operations for the next 12 months, raising substantial doubt about its going concern ability[146](index=146&type=chunk)[147](index=147&type=chunk) - Since inception, the company has raised **$293.1 million** gross proceeds, including **$103.5 million** from IPO, **$116.0 million** from preferred stock, **$5.0 million** from debt, **$53.6 million** from a private placement, and **$15.0 million** from the Kaken upfront payment[146](index=146&type=chunk) - Future funding requirements are substantial for clinical development and commercialization of product candidates, with no meaningful product revenue expected soon; additional capital may be sought through equity, debt, or collaborations[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - As of June 30, 2025, material cash requirements include **$1.0 million** for the Term Loan (maturing Jan 2026) and **$1.0 million** for operating lease payments (expiring Feb 2028)[156](index=156&type=chunk)[157](index=157&type=chunk) | Cash Flows (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(21,555) | $(26,064) | | Net cash used in financing activities | $(811) | $(592) | | Net decrease in cash, cash equivalents, and restricted cash | $(22,366) | $(26,656) | - Net cash used in operating activities decreased by **$4.5 million**, primarily due to lower clinical development payments offset by asset acquisition payments[161](index=161&type=chunk) - Net cash used in financing activities increased to **$0.8 million**, mainly from Term Loan principal payments, compared to **$0.6 million** in 2024 which included stock option proceeds[162](index=162&type=chunk) [Critical Accounting Estimates](index=37&type=section&id=Critical%20Accounting%20Estimates) - The preparation of financial statements requires estimates and assumptions, including for accrued R&D expenses, revenue recognition, stock-based compensation, and uncertain tax positions; no significant changes to critical accounting estimates occurred during the six months ended June 30, 2025[163](index=163&type=chunk)[165](index=165&type=chunk) [JOBS Act](index=39&type=section&id=JOBS%20Act) - As an 'emerging growth company' under the JOBS Act, Spruce Biosciences utilizes reduced reporting requirements and has elected the extended transition period for new accounting standards until December 31, 2025, or earlier if its status changes[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, specifically interest rate risk, foreign currency exchange rate risk, and the effects of inflation, concluding that these risks did not have a material impact on financial statements for the periods presented - The company's cash and cash equivalents are primarily in bank deposits and money market funds, carrying interest rate risk; a hypothetical **1%** change in interest rates would not materially affect financial statements as of June 30, 2025[169](index=169&type=chunk)[170](index=170&type=chunk) - Operations are primarily in the U.S., with some foreign currency denominated invoices, but foreign currency exchange rate changes had no material impact[171](index=171&type=chunk) - Inflation affects labor and clinical trial costs, but did not have a significant impact on results of operations for the periods presented, and no material effect is expected for future reporting periods as of June 30, 2025[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%2E%20Controls%20and%20Procedures) Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they are effective; no material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, providing reasonable assurance for timely and accurate information reporting[173](index=173&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[174](index=174&type=chunk) - Management acknowledges that controls and procedures provide only reasonable, not absolute, assurance due to inherent limitations and resource constraints[175](index=175&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%2E%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, though it may become involved in the ordinary course of business; litigation, regardless of outcome, can negatively impact the business - The company is not currently involved in any material legal proceedings[177](index=177&type=chunk) - Litigation, even if not material, can adversely affect the business due to defense/settlement costs, diversion of management resources, and reputational harm[177](index=177&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%2E%20Risk%20Factors) This section details significant risks that could adversely affect the company's business, financial condition, and stock price; key areas of risk include stock ownership, business operations and industry-specific challenges, and intellectual property protection [Risks Related to Ownership of Our Common Stock](index=41&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - Failure to regain Nasdaq compliance could lead to delisting, reducing market liquidity and stock price[179](index=179&type=chunk)[183](index=183&type=chunk) - The trading price of common stock has been, and may continue to be, highly volatile due to various factors including clinical trial results, regulatory decisions, and market conditions[185](index=185&type=chunk)[190](index=190&type=chunk) - The company does not intend to pay dividends, limiting stockholder returns to stock value appreciation[191](index=191&type=chunk)[193](index=193&type=chunk) - Principal stockholders and management own a significant percentage of stock, allowing them to exert substantial control over stockholder-approved matters[196](index=196&type=chunk)[205](index=205&type=chunk) - As an emerging growth company and smaller reporting company, reduced reporting requirements may make the common stock less attractive to investors[208](index=208&type=chunk) - Failure to maintain effective internal control over financial reporting could adversely affect investor confidence and stock value[208](index=208&type=chunk) - Future sales and issuances of common stock or rights to purchase common stock could result in additional dilution for existing stockholders and cause the stock price to fall[208](index=208&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could delay or prevent a change of control[208](index=208&type=chunk) [Risks Related to Our Business and Industry](index=53&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) - Substantial doubt exists about the company's ability to continue as a going concern due to insufficient working capital for the next twelve months[214](index=214&type=chunk)[216](index=216&type=chunk) - Significant additional financing is required for product candidate development and commercialization; failure to obtain it may force delays or elimination of programs[222](index=222&type=chunk)[224](index=224&type=chunk) - The company has a limited operating history, significant net losses since inception, and anticipates continued losses, which are expected to increase with clinical development[225](index=225&type=chunk)[239](index=239&type=chunk) - Inability to advance product candidates (TA-ERT, tildacerfont, SPR202) in clinical development, obtain regulatory approval, or commercialize them, or significant delays, would materially harm the business[240](index=240&type=chunk)[242](index=242&type=chunk) - Clinical trials may fail to demonstrate adequate safety and efficacy, preventing or delaying regulatory approval[243](index=243&type=chunk)[244](index=244&type=chunk) - Significant competition from other biotechnology and pharmaceutical companies could adversely affect operating results[248](index=248&type=chunk)[249](index=249&type=chunk) - Preclinical and clinical drug development is lengthy, expensive, and uncertain; earlier trial results may not predict future outcomes[251](index=251&type=chunk)[254](index=254&type=chunk) - Difficulties enrolling patients in clinical trials, especially for rare disorders like MPS-IIIB, could delay or adversely affect development activities[255](index=255&type=chunk)[264](index=264&type=chunk) - Delays in clinical trials could increase costs, limit revenue generation, and harm commercial prospects[268](index=268&type=chunk)[270](index=270&type=chunk) - Product candidates are subject to extensive, costly, and time-consuming regulation and compliance obligations, which may cause delays or prevent approvals[271](index=271&type=chunk)[272](index=272&type=chunk) - Interim, topline, and preliminary clinical trial data may change, and final data could differ materially[273](index=273&type=chunk)[274](index=274&type=chunk] - If market opportunities for product candidates are smaller than believed, future revenue may be adversely affected[276](index=276&type=chunk)[277](index=277&type=chunk) - Obtaining regulatory approval in one jurisdiction does not guarantee success in others, and failure in one may negatively impact others[278](index=278&type=chunk)[284](index=284&type=chunk) - Lack of a marketing and sales organization and inability to establish one or partner with third parties could prevent product revenue generation[288](index=288&type=chunk)[292](index=292&type=chunk) - Unfavorable U.S. and global economic/geopolitical conditions (e.g., inflation, wars, banking instability) could adversely affect business and financial condition[294](index=294&type=chunk)[295](index=295&type=chunk) - International trade policies, including tariffs and trade barriers, may increase R&D expenses, disrupt supply chains, and delay development timelines[300](index=300&type=chunk)[301](index=301&type=chunk) - High dependence on key personnel; failure to attract and retain qualified individuals could hinder business strategy implementation[302](index=302&type=chunk)[303](index=303&type=chunk) - Side effects or adverse events associated with product candidates could delay/prevent regulatory approval or lead to negative consequences post-approval[306](index=306&type=chunk)[307](index=307&type=chunk] - Ongoing regulatory obligations and review post-approval may result in significant additional expense and penalties for non-compliance[308](index=308&type=chunk)[309](index=309&type=chunk) - Changes in funding for regulatory agencies or government shutdowns could hinder timely review and approval of products[311](index=311&type=chunk)[312](index=312&type=chunk) - Even with regulatory approval, product candidates may not gain market acceptance among physicians, patients, and payors[317](index=317&type=chunk)[318](index=318&type=chunk) - Improper promotion of off-label uses or off-label prescription could lead to sanctions, fines, and reputational harm[330](index=330&type=chunk)[331](index=331&type=chunk] - Limited or unavailable coverage and reimbursement in certain market segments could hinder profitable sales[335](index=335&type=chunk)[336](index=336&type=chunk) - Current and future legislation and healthcare reform measures may increase difficulty and cost of obtaining approval and affect pricing[337](index=337&type=chunk)[339](index=339&type=chunk] - Failure to obtain regulatory approval in international jurisdictions would prevent international marketing[340](index=340&type=chunk)[341](index=341&type=chunk) - Risks associated with international marketing (e.g., differing regulations, economic instability, foreign currency fluctuations) could adversely affect profitability[343](index=343&type=chunk)[344](index=344&type=chunk) - Failure to develop and commercialize additional product candidates could limit business growth[345](index=345&type=chunk)[346](index=346&type=chunk) - Future strategic alliances or licensing arrangements may not be successful[350](index=350&type=chunk)[351](index=351&type=chunk) - Difficulties in managing organizational growth could adversely affect financial performance and commercialization ability[361](index=361&type=chunk)[364](index=364&type=chunk) - Indebtedness to Silicon Valley Bank (SVB) may limit operational flexibility, and default could lead to foreclosure on assets[366](index=366&type=chunk)[376](index=376&type=chunk] - Business disruptions (e.g., natural disasters, epidemics) could harm future revenues and increase costs[377](index=377&type=chunk)[378](index=378&type=chunk) - Misconduct by employees, contractors, or vendors, including noncompliance with regulatory standards, could lead to significant penalties[379](index=379&type=chunk)[380](index=380&type=chunk] - Compromised information technology systems or data could result in regulatory actions, litigation, and business disruptions[380](index=380&type=chunk) - Stringent and evolving data privacy and security obligations could lead to regulatory investigations, litigation, and adverse business consequences[380](index=380&type=chunk) - Product liability lawsuits could result in substantial liabilities and limit commercialization[380](index=380&type=chunk) - Compliance with U.S. and foreign export/import controls, sanctions, anti-corruption, and anti-money laundering laws is critical; violations can lead to criminal liability and harm business[380](index=380&type=chunk) [Risks Related to Our Intellectual Property](index=114&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) - Inability to obtain and maintain sufficient intellectual property protection for product candidates and technologies could allow competitors to commercialize similar products[400](index=400&type=chunk)[401](index=401&type=chunk) - Patent terms may be inadequate to protect competitive position for a sufficient amount of time, especially given lengthy development and regulatory review[405](index=405&type=chunk)[415](index=415&type=chunk) - Failure to obtain patent term extension for product candidates could materially harm the business by shortening exclusive marketing rights[416](index=416&type=chunk)[417](index=417&type=chunk) - Non-compliance with obligations in intellectual property license agreements (e.g., with Lilly, HBM) or disruptions with licensors could lead to loss of significant rights[419](index=419&type=chunk)[423](index=423&type=chunk) - Failure to comply with procedural, document submission, and fee payment requirements by governmental patent agencies could reduce or eliminate patent protection[424](index=424&type=chunk)[427](index=427&type=chunk) - Changes in U.S. patent law (e.g., America Invents Act, Supreme Court decisions) could diminish the value of patents, impairing protection for product candidates[428](index=428&type=chunk)[433](index=433&type=chunk) - Inability to protect intellectual property rights globally due to varying national laws and enforcement challenges could limit commercial advantage[434](index=434&type=chunk)[435](index=435&type=chunk) - Claims challenging inventorship or ownership of patents and other intellectual property could lead to loss of rights or substantial costs[441](index=441&type=chunk)[442](index=442&type=chunk) - Inability to obtain or maintain necessary rights to product components and processes through acquisitions and in-licenses could hinder development pipeline growth[445](index=445&type=chunk)[448](index=448&type=chunk) - Third-party claims alleging intellectual property infringement may prevent or delay drug discovery and development efforts, leading to costly litigation or licensing requirements[449](index=449&type=chunk)[452](index=452&type=chunk] - Inability to protect the confidentiality of trade secrets, especially when shared with third parties, would harm business and competitive position[453](index=453&type=chunk)[454](index=454&type=chunk) - Inadequate protection of trademarks and trade names could impede name recognition and adversely affect the business[455](index=455&type=chunk)[456](index=456&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=140&type=section&id=Item%202.%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section notes that the company is prohibited from paying cash dividends without prior written consent from Silicon Valley Bank, as per the Loan Agreement - The company is prohibited from paying cash dividends without the prior written consent of Silicon Valley Bank, as stipulated in the Loan Agreement[477](index=477&type=chunk) [Item 3. Defaults Upon Senior Securities](index=140&type=section&id=Item%203.%2E%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period [Item 4. Mine Safety Disclosures](index=140&type=section&id=Item%204.%2E%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period [Item 5. Other Information](index=140&type=section&id=Item%205.%2E%20Other%20Information) No other information is reported under this item [Item 6. Exhibits](index=141&type=section&id=Item%206.%2E%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including amendments to the Certificate of Incorporation, Bylaws, Certificate of Designation for Series A Preferred Stock, various agreements, and certifications - Key exhibits include amendments to the Certificate of Incorporation (July 24, 2025), Certificate of Designation of Series A Preferred Stock (May 29, 2025), Purchase Agreement (May 29, 2025), and First Amendment to Antibody License Agreement (July 28, 2025)[481](index=481&type=chunk)

**Executive Summary & Recent Highlights**](index=1&type=section&id=Executive%20Summary%20%26%20Recent%20Highlights) This section provides an overview of Q2 2025 financial results, corporate updates, and key strategic advancements [**Overview of Q2 2025 Results and Corporate Updates**](index=1&type=section&id=Overview%20of%20Q2%202025%20Results%20and%20Corporate%20Updates) Spruce Biosciences reported financial results for the second quarter ended June 30, 2025, and provided key corporate updates, including significant progress on its lead programs and efforts towards Nasdaq relisting - Spruce Biosciences reported **Q2 2025 financial results** and provided **corporate updates**, including progress on **TA-ERT** for **Sanfilippo Syndrome Type B (MPS IIIB)**, initiation of the **TAMARIND trial** for **Tildacerfont** in **Major Depressive Disorder (MDD)**, and efforts for **Nasdaq relisting**[1](index=1&type=chunk) [**CEO's Statement**](index=1&type=section&id=CEO%27s%20Statement) The CEO highlighted the company's commitment to advancing TA-ERT as a potential first-to-market, disease-modifying treatment for MPS IIIB, with a Biologics License Application (BLA) submission anticipated in Q1 2026 - CEO Javier Szwarcberg emphasized the company's commitment to advancing **TA-ERT** as a potential **first-to-market treatment** for children diagnosed with **Sanfilippo Syndrome Type B (MPS IIIB)**[2](index=2&type=chunk) - The company remains on track to submit the **biologics license application** for **TA-ERT** under the **accelerated approval pathway** in the **first quarter of 2026**[2](index=2&type=chunk) - **TA-ERT** has the potential to be the **first disease-modifying therapy** to treat **MPS IIIB**, offering a novel option for affected families[2](index=2&type=chunk) **Corporate Updates**](index=1&type=section&id=Corporate%20Updates) This section details clinical trial progress for TA-ERT and Tildacerfont, along with corporate actions like Nasdaq relisting [**TA-ERT Clinical Data and Regulatory Pathway**](index=1&type=section&id=TA-ERT%20Clinical%20Data%20and%20Regulatory%20Pathway) Integrated long-term clinical data for TA-ERT demonstrated profound and durable efficacy and safety in patients with MPS IIIB, supporting its potential as a transformative treatment - Integrated long-term clinical data of **TA-ERT** demonstrated **profound and durable efficacy and safety** in patients with **MPS IIIB** over a **five-year period** from clinical studies 201, 202, and 401[3](index=3&type=chunk) - **Biologics License Application (BLA) submission** of **TA-ERT** for **MPS IIIB** is anticipated in the **first quarter of 2026**[1](index=1&type=chunk) [**Efficacy and Safety in MPS IIIB**](index=1&type=section&id=Efficacy%20and%20Safety%20in%20MPS%20IIIB) This section presents clinical data on the efficacy and safety profile of TA-ERT in patients with MPS IIIB | Metric | Change/Observation | Timeframe | p-value | | :----- | :----------------- | :-------- | :------ | | CSF HS-NRE | Decreased 91.5 ng/mL from baseline | 240 weeks | <0.0001 | | Cognition (BSID-C) | Remained stable in treated group; significantly higher mean BSID-C in treated vs. untreated children | 6-10 years of age | 0.005 (at 6 yrs), <0.0001 (at 10 yrs) | | CGMV | Stabilized from weeks 48 to 240 after initial decrease | 48-240 weeks | N/A | | Safety | Adequate safety profile demonstrated over up to 7.3 years | Up to 7.3 years | N/A | [**Tildacerfont (TAMARIND Trial) for MDD**](index=1&type=section&id=Tildacerfont%20(TAMARIND%20Trial)%20for%20MDD) The first patient was dosed in the Phase 2 TAMARIND trial of Tildacerfont for Major Depressive Disorder (MDD), a study funded and conducted by HMNC Holding GmbH, with topline results expected in 1H 2026 - The **first patient was dosed** in the **Phase 2 TAMARIND trial** of **Tildacerfont** for **Major Depressive Disorder (MDD)**[1](index=1&type=chunk)[6](index=6&type=chunk) - **HMNC Holding GmbH** will fund and conduct the **Phase 2 proof-of-concept study**, exploring the efficacy of **400mg twice-daily tildacerfont** versus placebo in **MDD patients** screened using HMNC's proprietary genetic test, **Cortibon**[7](index=7&type=chunk) - **Topline results** from the **TAMARIND trial** are anticipated in the **first half of 2026**[1](index=1&type=chunk)[7](index=7&type=chunk) [**Nasdaq Capital Market Relisting**](index=2&type=section&id=Nasdaq%20Capital%20Market%20Relisting) Spruce Biosciences implemented a 1-for-75 reverse stock split to meet Nasdaq's minimum bid price requirement, with relisting anticipated upon sustained compliance - The company implemented a **1-for-75 reverse stock split** of its common stock to comply with the **minimum bid price requirement** for continued listing on the **Nasdaq Capital Market**[7](index=7&type=chunk) - **Nasdaq Capital Market relisting** is anticipated following compliance with the minimum bid price for **20 consecutive trading days**[1](index=1&type=chunk)[7](index=7&type=chunk) **Second Quarter 2025 Financial Results**](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) This section presents the company's financial performance for Q2 2025, highlighting key income statement and balance sheet figures [**Key Financial Highlights**](index=2&type=section&id=Key%20Financial%20Highlights) Spruce Biosciences reported a net loss of $2.1 million for Q2 2025, a significant improvement from Q2 2024, driven by reduced R&D and G&A expenses, with cash and cash equivalents expected to fund operations through the end of 2025 | Financial Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Cash & Cash Equivalents (as of June 30) | $16,387 | N/A | N/A | N/A | | R&D Expenses | $(430) | $8,090 | $10,407 | $18,407 | | G&A Expenses | $3,122 | $3,556 | $6,777 | $7,874 | | Total Operating Expenses | $2,692 | $11,646 | $17,184 | $26,281 | | Net Loss | $(2,067) | $(9,181) | $(16,108) | $(20,806) | | Net Loss Per Share (Basic & Diluted) | $(3.50) | $(16.73) | $(27.36) | $(37.94) | - **Cash and cash equivalents** as of **June 30, 2025**, were **$16.4 million**, expected to fund the current operating plan through the **end of 2025**[8](index=8&type=chunk) - **R&D expenses** for **Q2 2025** included a **reduction in recorded liabilities of $3.3 million** and an **increase in receivables of $0.7 million** associated with the acquisition of **TA-ERT**[8](index=8&type=chunk) - **G&A expenses decreased** primarily due to a **decrease in stock-based compensation expense**[8](index=8&type=chunk) **About Spruce Biosciences**](index=3&type=section&id=About%20Spruce%20Biosciences) This section provides a brief overview of Spruce Biosciences, its mission, and therapeutic focus [**Company Overview**](index=3&type=section&id=Company%20Overview) Spruce Biosciences is a late-stage biopharmaceutical company dedicated to developing and commercializing novel therapies for neurological disorders with significant unmet medical needs - **Spruce Biosciences** is a **late-stage biopharmaceutical company** focused on developing and commercializing **novel therapies** for **neurological disorders** with **significant unmet medical need**[9](index=9&type=chunk) **Forward-Looking Statements**](index=3&type=section&id=Forward-Looking%20Statements) This section includes a standard disclaimer regarding forward-looking statements and associated risks and uncertainties [**Disclaimer**](index=3&type=section&id=Disclaimer) This section serves as a standard disclaimer, indicating that statements regarding future events are forward-looking and subject to various risks and uncertainties, which may cause actual results to differ materially - Statements in the press release regarding matters that are not historical facts are '**forward-looking statements**' subject to **risks and uncertainties**, and **actual results may differ materially**[10](index=10&type=chunk) - **Forward-looking statements** include those related to the ability to seek **accelerated approval for TA-ERT**, **timing of regulatory filings**, **clinical impact**, and the **resumption of Nasdaq trading**[10](index=10&type=chunk) **Financial Statements**](index=4&type=section&id=Financial%20Statements) This section presents the condensed balance sheets and statements of operations for the reported periods [**Condensed Balance Sheets**](index=4&type=section&id=Condensed%20Balance%20Sheets) The condensed balance sheets provide a snapshot of Spruce Biosciences' financial position as of June 30, 2025, compared to December 31, 2024, showing changes in assets, liabilities, and stockholders' equity | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $16,387 | $38,753 | | Prepaid expenses | $1,868 | $3,177 | | Other current assets | $2,698 | $2,276 | | Total current assets | $20,953 | $44,206 | | Right-of-use assets | $803 | $934 | | Other assets | $64 | $69 | | Total assets | $21,820 | $45,209 | | LIABILITIES (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Accounts payable | $807 | $1,295 | | Accrued expenses and other current liabilities | $6,310 | $12,329 | | Term loan, current portion | $943 | $1,622 | | Total current liabilities | $8,060 | $15,246 | | Lease liabilities, net of current portion | $580 | $736 | | Term loan, net of current portion | $0 | $124 | | Other liabilities | $0 | $282 | | Total liabilities | $8,640 | $16,388 | | STOCKHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Additional paid-in capital | $279,556 | $279,089 | | Accumulated deficit | $(266,376) | $(250,268) | | Total stockholders' equity | $13,180 | $28,821 | [**Condensed Statements of Operations and Comprehensive Loss**](index=5&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The condensed statements of operations detail the company's financial performance for the three and six months ended June 30, 2025, showing a reduced net loss compared to the same periods in 2024 | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $0 | $1,610 | $0 | $3,612 | | Research and development | $(430) | $8,090 | $10,407 | $18,407 | | General and administrative | $3,122 | $3,556 | $6,777 | $7,874 | | Total operating expenses | $2,692 | $11,646 | $17,184 | $26,281 | | Loss from operations | $(2,692) | $(10,036) | $(17,184) | $(22,669) | | Interest expense | $(29) | $(83) | $(65) | $(180) | | Interest and other income, net | $654 | $938 | $1,141 | $2,043 | | Net loss and comprehensive loss | $(2,067) | $(9,181) | $(16,108) | $(20,806) | | Net loss per share, basic and diluted | $(3.50) | $(16.73) | $(27.36) | $(37.94) | | Weighted-average shares of common stock outstanding, basic and diluted | 591,137 | 548,789 | 588,653 | 548,344 | **Contacts**](index=6&type=section&id=Contacts) This section provides contact information for media and investor relations inquiries [**Media and Investor Relations**](index=6&type=section&id=Media%20and%20Investor%20Relations) This section provides contact information for media and investor inquiries - Contact information for **media inquiries** is provided via **Katie Beach Oltsik** at **Inizio Evoke Comms** and **media@sprucebio.com**[14](index=14&type=chunk) - Contact information for **investor inquiries** is provided via **Samir Gharib**, **President and CFO** of **Spruce Biosciences, Inc.**, at **investors@sprucebio.com**[14](index=14&type=chunk)

Core Insights - HMNC Brain Health and Spruce Biosciences have initiated the Phase 2 clinical trial named TAMARIND to evaluate tildacerfont as a treatment for major depressive disorder (MDD) [2][3] - The trial aims to redefine depression treatment by targeting biological roots and utilizing a proprietary patient selection tool to identify patients likely to respond to the treatment [4][7] - Topline results from the TAMARIND trial are expected in the first half of 2026 [5] Company Overview - HMNC Brain Health is a global precision psychiatry biopharmaceutical company focused on developing personalized therapies for MDD [8] - Spruce Biosciences is a late-stage biopharmaceutical company that develops novel therapies for neurological disorders with significant unmet medical needs [8] Clinical Trial Details - The TAMARIND trial is a randomized, double-blind, placebo-controlled study involving 88 adults with MDD, selected using HMNC's proprietary patient selection tool [5] - The primary endpoint is the change in depression total scores from baseline using the Hamilton Depression Rating Scale, with secondary endpoints assessing functional impairment and overall quality of life [5] Treatment Mechanism - Tildacerfont is a selective, non-steroidal oral antagonist of the CRF1 receptor, which regulates the HPA axis and is implicated in MDD [6] - By blocking the CRF1 receptor, tildacerfont may address hyperactive CRF neurotransmission and HPA axis dysfunction in MDD patients [6] Patient Selection Tool - HMNC's investigational-stage patient selection tool uses genetic markers to identify MDD patients who are more likely to benefit from CRF1 receptor antagonism [7] - This approach aims to improve treatment efficacy and reduce costs and time by moving away from a trial-and-error treatment paradigm [7]

Tralesinidase Alfa (TA-ERT) for MPS IIIB - Tralesinidase Alfa 预计在 2026 年上半年提交 BLA 申请，该项目已准备就绪[8] - MPS IIIB 是一种影响 1/200,000 新生儿的常染色体隐性遗传病[14] - Tralesinidase Alfa 显著且持久地使脑脊液 HS 和 HS-NRE 水平正常化[22] - 早期使用 Tralesinidase Alfa 可稳定 MPS IIIB 患者的认知能力下降[29] - 在为期 48 周的初步研究及其扩展研究中，共进行了约 6,000 次给药，Tralesinidase Alfa 通常具有良好的耐受性[32] Tildacerfont + Cortibon for Major Depressive Disorder (MDD) - Tildacerfont + Cortibon 治疗重度抑郁症 (MDD) 的 2 期研究的顶线数据预计在 2026 年上半年公布[8] - Cortibon 是一种基因选择工具，可基于遗传标记识别 CRHR1 拮抗剂的应答者和非应答者[40] - Cortibon 挑选出约 50% 的显示 HPA 轴功能障碍迹象的 MDD 患者亚群[43] - 在 Cortibon 选择的 MDD 患者群体中，Cohen's d 效应量显著[46] SPR202 & SPR204 - SPR202 是一种用于治疗先天性肾上腺皮质增生症 (CAH) 的抗促肾上腺皮质激素释放激素 (CRH) 单克隆抗体，目前处于 IND 申报阶段[58, 63] - SPR204 是一种用于治疗减重手术后低血糖症的 GLP-1 受体拮抗剂单克隆抗体，目前处于 IND 申报阶段[64, 71] Financials - 截至 2025 年 3 月 31 日，公司拥有 2561.5 万美元的现金和现金等价物，以及 140.2 万美元的债务[74]

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Financial Statements](index=6&type=section&id=Item%201.%20Unaudited%20Condensed%20Financial%20Statements) The company reports a Q1 2025 net loss of $14.0 million and declining cash reserves, raising substantial doubt about its ability to continue as a going concern Condensed Balance Sheet Data (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $25,615 | $38,753 | | **Total current assets** | $30,576 | $44,206 | | **Total assets** | $31,649 | $45,209 | | **Total current liabilities** | $15,666 | $15,246 | | **Total liabilities** | $16,325 | $16,388 | | **Total stockholders' equity** | $15,324 | $28,821 | | **Accumulated deficit** | $(264,309) | $(250,268) | Condensed Statements of Operations (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Collaboration revenue | $0 | $2,002 | | Research and development | $10,837 | $10,317 | | General and administrative | $3,655 | $4,318 | | **Loss from operations** | **$(14,492)** | **$(12,633)** | | **Net loss** | **$(14,041)** | **$(11,625)** | | **Net loss per share** | **$(0.32)** | **$(0.28)** | - The company's cash and cash equivalents of **$25.6 million** as of March 31, 2025, are insufficient to fund planned operations for the next 12 months, raising **substantial doubt about its ability to continue as a going concern**[24](index=24&type=chunk) - On April 21, 2025, the company approved a **55% workforce reduction** to prioritize the development of tralesinidase alfa, expecting to incur approximately **$0.9 million** in related charges[97](index=97&type=chunk)[98](index=98&type=chunk) - On April 22, 2025, the company received a delisting notice from Nasdaq and its common stock began trading on the **OTC Pink Marketplace** on April 29, 2025[5](index=5&type=chunk)[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to tralesinidase alfa, an increased Q1 net loss, and reiterates going concern doubts due to insufficient cash - The company has shifted its focus from tildacerfont to the development of **tralesinidase alfa ("TA-ERT")** for neurological disorders with significant unmet medical need[109](index=109&type=chunk)[110](index=110&type=chunk) Results of Operations Comparison (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $2,002 | $(2,002) | | Research and development | $10,837 | $10,317 | $520 | | General and administrative | $3,655 | $4,318 | $(663) | | **Net loss** | **$(14,041)** | **$(11,625)** | **$(2,416)** | - R&D expenses increased by $0.5 million, primarily due to a **$5.7 million cost for acquiring SPR202**, offset by a $3.4 million decrease in clinical activities for the discontinued tildacerfont CAH program and a $1.5 million decrease in personnel costs[136](index=136&type=chunk) - The company's cash and cash equivalents as of March 31, 2025, are **insufficient to fund operations** and debt obligations for at least 12 months, raising **substantial doubt about its ability to continue as a going concern**[142](index=142&type=chunk)[218](index=218&type=chunk) Cash Flow Summary (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,727) | $(14,958) | | Net cash used in financing activities | $(411) | $(227) | | **Net decrease in cash** | **$(13,138)** | **$(15,185)** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations, though management believes the potential impact on financial statements is not material - The company's primary market risk is **interest rate risk** on its cash equivalents and variable-rate term loan, but a hypothetical 1% change is not expected to have a material effect[162](index=162&type=chunk)[163](index=163&type=chunk) - Foreign currency exchange risk and inflation are not believed to have had a significant impact on the company's results of operations[164](index=164&type=chunk)[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes - Management concluded that as of March 31, 2025, the company's **disclosure controls and procedures were effective**[166](index=166&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[167](index=167&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings but acknowledges that litigation can arise in the ordinary course of business - As of the filing date, the company is **not a party to any material legal proceedings**[170](index=170&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant risks including Nasdaq delisting, ongoing financial losses, going concern doubts, and reliance on third parties [Risks Related to Ownership of Our Common Stock](index=39&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Stockholder risks include reduced liquidity from Nasdaq delisting, high price volatility, and no anticipated dividends - The company's common stock was **delisted from Nasdaq** on April 29, 2025, and now trades on the OTC market, which could adversely affect liquidity and stock price[173](index=173&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - The stock price is **highly volatile**, with a closing price range from $0.07 to $0.43 between January 1, 2025, and May 1, 2025[179](index=179&type=chunk) - The company has **never paid dividends** and does not anticipate doing so, with the Loan Agreement also prohibiting such payments without lender consent[184](index=184&type=chunk) [Risks Related to Our Business and Industry](index=50&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) The company faces fundamental business risks from its history of losses, insufficient capital, and uncertainty in clinical development and competition - The company has a history of significant net losses, reporting a **loss of $14.0 million for Q1 2025** and an **accumulated deficit of $264.3 million** as of March 31, 2025[211](index=211&type=chunk) - There is **substantial doubt about the company's ability to continue as a going concern**, as its cash of $25.6 million is insufficient to fund operations for the next twelve months[218](index=218&type=chunk) - The company intends to seek **accelerated approval for TA-ERT** for MPSIIIB based on a biomarker, but this pathway is not guaranteed and requires a confirmatory Phase 3 trial[225](index=225&type=chunk)[230](index=230&type=chunk) - The company faces **significant competition** from other biopharmaceutical companies with greater financial and technical resources[234](index=234&type=chunk) - Patient enrollment for clinical trials is challenging, especially for rare diseases like MPS-IIIB, which has an estimated **U.S. population of less than 200 patients**[241](index=241&type=chunk) [Risks Related to Our Reliance on Third Parties](index=103&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) The company's operations are highly dependent on third parties for intellectual property, clinical trials, and single-source manufacturing - The company is dependent on **intellectual property licensed from Eli Lilly, BioMarin, HBM, and Twist**, and termination of these licenses could halt product development[373](index=373&type=chunk) - The company relies on third-party CROs to conduct its clinical trials and is responsible for ensuring their compliance with GCPs, with failures potentially delaying development[375](index=375&type=chunk) - The company relies completely on **third-party manufacturers**, including single-source suppliers for drug substance and product, for its clinical supplies[380](index=380&type=chunk)[381](index=381&type=chunk) [Risks Related to Our Intellectual Property](index=107&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Success depends on obtaining and defending patents, a complex and uncertain process, with risks of infringement claims and challenges to existing IP - The company's ability to commercialize its products depends on obtaining and maintaining **sufficient patent protection**, a highly uncertain and complex process[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) - The company may not be able to protect its intellectual property rights throughout the world, as **patent laws and enforcement vary significantly** by country[415](index=415&type=chunk) - The company may be subject to **third-party claims of patent infringement**, which could result in costly litigation and block commercialization of its product candidates[430](index=430&type=chunk)[432](index=432&type=chunk) - The company is currently a party to **post-grant reviews and opposition proceedings** challenging the validity of its patents, which could result in the loss of exclusivity[449](index=449&type=chunk) - The company relies on **trade secrets and confidentiality agreements**, but these may not provide adequate protection against unauthorized disclosure[454](index=454&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=136&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's Loan Agreement with Silicon Valley Bank prohibits the payment of cash dividends without prior written consent - The company is **prohibited from paying cash dividends** without the prior written consent of Silicon Valley Bank, as per the terms of its Loan Agreement[462](index=462&type=chunk) [Item 3. Defaults Upon Senior Securities](index=136&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports that this item is not applicable - Not Applicable[463](index=463&type=chunk) [Item 4. Mine Safety Disclosures](index=136&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports that this item is not applicable - Not Applicable[464](index=464&type=chunk) [Item 5. Other Information](index=136&type=section&id=Item%205.%20Other%20Information) The company reports no other information for disclosure under this item - None[465](index=465&type=chunk) [Item 6. Exhibits](index=137&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including corporate governance documents, agreements, and officer certifications

Financial Position - Spruce Biosciences reported a cash and cash equivalents balance of $38.8 million as of December 31, 2024[6] Corporate Developments - The company announced the acquisition of tralesinidase alfa enzyme replacement therapy for the treatment of Sanfilippo Syndrome Type B[6] - A corporate update was provided, highlighting new corporate strategies and anticipated upcoming milestones[6] - The presentation titled "Tralesinidase Alfa Enzyme Replacement Therapy for the Treatment of Sanfilippo Syndrome Type B (MPSIIIB)" was shared to outline the new strategy[8]

Filing Information - Spruce Biosciences, Inc. filed a Notification of Late Filing on Form 12b-25 regarding its Annual Report for the fiscal year ended December 31, 2024[6]. - The Notification of Late Filing was submitted to the SEC on March 31, 2025[6]. - The report emphasizes that the information provided is not deemed "filed" under the Exchange Act[7]. Financial Estimates - The filing includes certain estimates about the Company's results of operations and financial condition for the fiscal year ended December 31, 2024[6]. - The filing does not include specific financial metrics or performance data for the fiscal year ended December 31, 2024[6]. - The Company has not yet provided detailed guidance or future outlook in this filing[6]. Company Classification and Trading - The Company is classified as an emerging growth company under the Securities Act of 1933[5]. - The Company’s common stock is traded on the Nasdaq Capital Market under the symbol SPRB[5]. Company Information - The Company’s principal executive offices are located in South San Francisco, California[2]. - There are no mentions of new products, technologies, market expansions, or acquisitions in the current report[6].

Core Viewpoint - Spruce Biosciences, Inc. (SPRB) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to institutional investors adjusting their valuations, resulting in buying or selling actions that affect stock prices [4]. Company Performance Indicators - For the fiscal year ending December 2024, Spruce Biosciences is expected to earn -$1.03 per share, reflecting a 16.9% change from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Spruce Biosciences has increased by 8.3%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places Spruce Biosciences in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10][11].

Financial Performance - Collaboration revenue for Q3 2024 was $0.6 million, a decrease of 80.5% compared to $3.1 million in Q3 2023[5] - Research and development (R&D) expenses for Q3 2024 were $6.6 million, down 51.3% from $13.5 million in Q3 2023[5] - General and administrative (G&A) expenses for Q3 2024 were $3.5 million, an increase of 9.4% compared to $3.2 million in Q3 2023[5] - Total operating expenses for Q3 2024 were $10.0 million, a decrease of 40.0% from $16.7 million in Q3 2023[5] - Net loss for Q3 2024 was $8.7 million, a reduction of 30.0% compared to $12.4 million in Q3 2023[5] Cash Position - Cash and cash equivalents as of September 30, 2024, were $60.1 million, expected to fund operations through the end of 2025[4] Clinical Trials - Topline data from the CAHmelia-204 study of tildacerfont in adult congenital adrenal hyperplasia (CAH) is anticipated in December 2024[1] - Topline results from the CAHptain-205 clinical trial are also anticipated in December 2024[3] - The end of Phase 2 meeting with the U.S. FDA is anticipated in the first half of 2025[3] Product Development - The company is developing tildacerfont for the treatment of CAH, polycystic ovary syndrome (PCOS), and major depressive disorder (MDD)[7]

Group 1 - Spruce Biosciences reported a quarterly loss of $0.21 per share, better than the Zacks Consensus Estimate of a loss of $0.27, and an improvement from a loss of $0.30 per share a year ago, resulting in an earnings surprise of 22.22% [1] - The company posted revenues of $0.6 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 66.56%, and a significant decline from year-ago revenues of $3.07 million [2] - Spruce Biosciences shares have declined approximately 81.7% since the beginning of the year, contrasting with the S&P 500's gain of 25.7% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is -$0.28 on revenues of $1.55 million, and for the current fiscal year, it is -$1.12 on revenues of $5.8 million [7] - The Medical - Biomedical and Genetics industry, to which Spruce Biosciences belongs, is currently ranked in the top 31% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]