Spruce Biosciences(SPRB) - 2022 Q4 - Annual Report

Financial Performance - The company reported a net loss of $46.180 million for the year ended December 31, 2022, compared to a net loss of $42.292 million in 2021, indicating an increase in losses of about 9.0%[651] - For the year ended December 31, 2022, the company reported a net loss of $46.2 million, compared to a net loss of $42.3 million in 2021, reflecting an increase in losses of approximately 2.1%[658] - The basic and diluted net loss per share for the year ended December 31, 2022, was $(1.96), compared to $(1.81) in 2021, with a net loss of $46.18 million in 2022[759] Assets and Liabilities - As of December 31, 2022, total assets decreased to $85.648 million from $126.486 million in 2021, reflecting a decline of approximately 32.3%[648] - As of December 31, 2022, the company had total liabilities of $17.162 million, an increase from $15.115 million in 2021[648] - As of December 31, 2022, the company had an accumulated deficit of $149.3 million, up from $103.1 million at the end of 2021, representing a 44.8% increase[664] Cash Flow - Cash and cash equivalents decreased to $24.487 million in 2022 from $42.748 million in 2021, a decline of approximately 42.5%[648] - The company used $41.7 million in cash for operating activities in 2022, up from $35.9 million in 2021, indicating a 16.5% increase in cash used[658] - The company reported a net cash decrease of $18.2 million in 2022, compared to a decrease of $114.4 million in 2021, indicating a significant reduction in cash outflow[658] Research and Development - Research and development expenses rose to $35.198 million in 2022, up from $30.698 million in 2021, representing an increase of approximately 14.9%[651] - Total operating expenses for 2022 were $47.283 million, compared to $42.066 million in 2021, marking an increase of about 12.5%[651] - Accrued research and development expenses increased to $7,449 thousand in 2022 from $3,837 thousand in 2021, indicating a focus on clinical trials and drug supply manufacturing[711] Financing and Future Needs - The company anticipates continued significant net losses as it progresses with clinical development and seeks regulatory approvals for its product candidate, tildacerfont[14] - The company expects to require substantial additional financing to develop tildacerfont and implement its operating plans[14] - The company anticipates needing to raise substantial additional financing in the future to support its operations, which may involve issuing additional equity or debt[665] Product Development and Risks - The company currently relies entirely on the success of tildacerfont, which is its only product candidate, and any delays in its clinical development could materially harm the business[14] - The company is subject to risks related to regulatory approvals and potential delays in clinical trials due to external factors such as the COVID-19 pandemic and macroeconomic uncertainties[670][671] - The company is focused on developing tildacerfont as a potential first non-steroidal therapy for classic congenital adrenal hyperplasia (CAH) and polycystic ovary syndrome (PCOS)[660] Stock and Compensation - The company incurred stock-based compensation expenses of $3.6 million in 2022, down from $4.0 million in 2021, reflecting a decrease of approximately 10.3%[658] - The total stock-based compensation expense for the year ended December 31, 2022, was $3.631 million, a decrease from $3.958 million in 2021[744] - The company has a total of $7.2 million of unrecognized stock-based compensation expense expected to be recognized over an estimated weighted-average vesting term of 2.4 years[744] Tax and Deferred Tax Assets - The federal statutory income tax rate for the company is 21.0%, with an effective tax rate of 0% for the years ended December 31, 2022, and 2021[749] - The Company recorded a valuation allowance against its U.S. net deferred tax assets, which increased by $17.0 million in 2022 due to an increase in net operating loss and capitalization of research costs[750] - The total gross deferred tax assets as of December 31, 2022, amounted to $50.75 million, with a valuation allowance of $50.36 million[750] Agreements and Collaborations - The Company entered into a Collaboration and License Agreement with Kaken Pharmaceutical, granting exclusive rights for tildacerfont in Japan, with an upfront payment of $15.0 million and potential milestone payments of up to $65.0 million[760] - The company is required to pay up to $23.0 million in milestone payments to Eli Lilly upon achieving certain clinical development and commercial sales milestones[746] Market and Investment Strategy - The Company utilizes a fair value hierarchy for financial instruments, classifying inputs into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs) [679] - The estimated fair value of the term loan is based on market observable interest rates, classified as Level 2 fair value measurement [679] - The Company has not recorded any impairment charges on securities related to other-than-temporary declines in fair value, indicating a stable investment strategy[708]