Spruce Biosciences(SPRB) - 2022 Q3 - Quarterly Report

Clinical Trials and Development - Tildacerfont achieved approximately 80% reductions in key adrenal hormone indicators in a 12-week Phase 2a clinical trial for classic CAH patients [81]. - The company initiated CAHmelia-203 and CAHmelia-204 Phase 2b clinical trials, with topline results expected in the second half of 2023 and 2024, respectively [82]. - A Phase 2 open-label clinical trial for tildacerfont in children aged 6 to 17 with classic CAH is underway, with topline safety results anticipated in the first half of 2023 [83]. - Tildacerfont is also being investigated for potential use in treating polycystic ovary syndrome (PCOS), with a Phase 2 proof-of-concept trial initiated [84]. - The company anticipates significant increases in research and development expenses as tildacerfont advances in late-stage studies for classic CAH in adult patients [128]. Financial Performance - As of September 30, 2022, the company reported a net loss of $35.0 million and an accumulated deficit of $138.2 million [87]. - The company incurred a net loss of $11.401 million for the three months ended September 30, 2022, compared to a net loss of $11.447 million for the same period in 2021, showing an improvement of $46,000 [112]. - For the nine months ended September 30, 2022, net cash used in operating activities was $29.9 million, compared to $26.1 million for the same period in 2021 [139][141]. - The company has not generated any revenue and does not expect to do so until regulatory approval and commercialization of tildacerfont or future product candidates [127]. Expenses and Cash Flow - The company reported total operating expenses of $11.557 million for the three months ended September 30, 2022, compared to $11.400 million for the same period in 2021, reflecting an increase of $157,000 [112]. - Research and development expenses for the three months ended September 30, 2022, were $8.791 million, an increase of $184,000 from $8.607 million in the same period in 2021 [114]. - For the nine months ended September 30, 2022, total operating expenses were $35.173 million, an increase of $2.242 million from $32.931 million in the same period in 2021 [118]. - The company expects to continue incurring significant losses and does not anticipate positive cash flows from operations in the foreseeable future [87]. - The company expects to require substantial additional capital to fund operations and development efforts, with the timing and amount depending on various factors [129]. Capital and Funding - The company has raised a total of $224.5 million since inception, including $93.4 million from its IPO in October 2020 [88]. - The company has raised aggregate gross proceeds of $224.5 million since inception, including $103.5 million from its IPO in October 2020 [123]. - The company plans to build a specialized commercial organization to support the potential commercialization of tildacerfont in the U.S. and Europe [85]. Operational Risks - The ongoing COVID-19 pandemic and macroeconomic uncertainties may adversely affect the company's clinical trials and overall business operations [92]. - Inflation has increased labor and clinical trial costs, but the company does not expect significant impacts on future financial results due to inflation [153]. - The ongoing military conflict between Ukraine and Russia, along with related sanctions, is contributing to record inflation, yet the company anticipates no material effect on its business [153]. - The company relies on third parties for the manufacture and distribution of tildacerfont, which allows for a more efficient operational structure [86]. Financial Obligations - The company has obligations under a License Agreement that may require up to $23.0 million in milestone payments upon achieving specified milestones [137]. - Future payments of principal and interest on the Term Loan, commencing in January 2023, total $5.6 million [134]. - As of September 30, 2022, the company had total lease liabilities of $1.4 million for non-cancelable operating leases [135]. Cash Position - The company had cash, cash equivalents, and investments of $90.4 million as of September 30, 2022, down from $121.4 million as of December 31, 2021 [123]. - Cash provided by investing activities for the nine months ended September 30, 2022, was $9.1 million, primarily from proceeds of $43.0 million from maturities of investments [142]. - The company holds $90.4 million in cash, cash equivalents, and short-term investments as of September 30, 2022 [150]. Interest and Currency Risks - Interest and other income, net increased by $225,000 to $266,000 for the three months ended September 30, 2022, compared to $41,000 in the same period in 2021 [112]. - A hypothetical 1% change in interest rates would not have a material effect on the company's financial statements as of September 30, 2022 [151]. - The company's operations are exposed to foreign currency exchange rate fluctuations, but there was no material impact on results for the periods presented [152].