Summary of Spruce Biosciences Q1 2023 Earnings Call

1Key Financial Results and Metrics

As of December 31, 2024, Spruce reported cash and cash equivalents of $38.8 million.

The company expects its cash runway to support operations through the end of 2025.

There are 42.2 million shares of common stock outstanding, increasing to 60.7 million on a fully diluted basis.

The company anticipates needing $60 million in incremental capital to reach potential approval for Tralesinidase Alfa (TA-ERT), with approximately $30 million needed for the BLA submission.

2Strategic Updates and Business Highlights

Spruce announced a new corporate strategy focusing on developing and commercializing TA-ERT for MPS IIIB, a rare pediatric neurodegenerative disease.

The company acquired TA-ERT from BioMarin Pharmaceutical, assuming an exclusive worldwide license and potential milestone payments totaling $122.5 million.

TA-ERT has received fast track designation, rare pediatric disease designation, and orphan drug designation in both the US and EU.

The company plans to submit a BLA in the first half of 2026 and initiate a confirmatory trial with 14 patients prior to potential accelerated approval.

3Forward Guidance and Outlook

Spruce aims to build a specialized commercial organization for TA-ERT, estimating a team of 5 to 10 people will suffice for the US launch.

The company projects a $10 million quarterly spend in 2025, increasing to $15 million in the following fiscal year due to BLA enabling activities and commercial preparations.

The anticipated market for TA-ERT includes approximately 135 prevalent cases of MPS IIIB in the US, with a potential for 50% of those patients to be treated.

4Bad News, Challenges, or Points of Concern

Spruce's previous development efforts for CAH (Congenital Adrenal Hyperplasia) were discontinued due to failure to meet primary efficacy measures, which raises concerns about the company's ability to execute on new initiatives.

The company has limited financial resources and will require additional funding to advance its development plans beyond 2025.

The market environment remains volatile, which could complicate financing efforts.

The prior sponsor of TA-ERT discontinued the program in October 2023 due to financial constraints, leading to a lack of ongoing patient treatment and raising questions about the continuity of care.

5Notable Q&A Insights

Management expressed confidence in the FDA's commitment to the accelerated approval pathway for TA-ERT, citing recent precedents from other companies in the MPS space.

The confirmatory trial will focus on neurocognitive outcomes as a primary endpoint, with agreement on study design from the FDA.

There is a strong emphasis on mapping eligible patient populations and ensuring access through early access programs prior to commercial launch.

Pricing strategy discussions highlighted that while TA-ERT is expected to command a high price due to its therapeutic benefits, competitive pricing from other products in the MPS space will also be a factor to consider. Overall, Spruce Biosciences is positioning itself for a significant pivot in its business strategy with the acquisition of TA-ERT, while facing financial and operational challenges that will require careful management and additional capital to navigate successfully.