Spruce Biosciences Report

High Risk / High Reward Near Term Opportunity

Investment Summary

Spruce has multiple data readouts in various CAH segments in 2024, and presents a high risk opportunity. While past results suggest trial readouts will be positive, the relative magnitude of biomarker reductions will be critical, particularly as crinecerfont has set the bar at ~45%-55% reductions. 

Pros:

• MOA validated via early Spruce data and Neurocrine’s crinecerfont. 

• CAHmelia-203 trial design recruits pts with high baseline A4 (more likely to show large reductions)

• Separation of trials into glucocorticoid sparing, and A4 reduction in poorly controlled patients (improves odds of success)

Cons: 

• Potential for drug-drug interactions with tildacerfont

• Endpoint variability, and multiple biomarkers that don’t always correlate 

• COM patent expiry in 2027

• Orphan designation potentially under threat from crinecerfont

• Small sample size of ongoing trial (~20 per arm assumed)

• Some doses tested may be too low (e.g 50mg)

• Oddly presented data from initial studies (error bars)

Overall, this is a classic high risk, but potentially high reward situation. Positive results in March could send the stock up 50%+, but bad results could lead to drastic downside. A later readout in Q3 for glucocorticoid sparing could provide some downside protection, but Spruce will also have to do a near term raise so any dilution should be factored in. 

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