SPRUCE BIOSCIENCES, INC.

Previous wording

Since inception, we have incurred significant losses and negative cash flows from operations. During the three months ended March 31, 2025 and 2024, we incurred net losses of $14.0 million and $11.6 million, respectively, and used $12.7 million and $15.0 million of cash in operations, respectively. As of March 31, 2025, we had an accumulated deficit of $264.3 million, and we do not expect positive cash flows from operations for the foreseeable future. We expect to continue to incur significant and increasing losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our planned research and development activities.

Current wording

Since inception, we have incurred significant losses and negative cash flows from operations. During the six months ended June 30, 2025 and 2024, we incurred net losses of $16.1 million and $20.8 million, respectively, and used $21.6 million and $26.1 million of cash in operations, respectively. As of June 30, 2025, we had an accumulated deficit of $266.4 million, and we do not expect positive cash flows from operations for the foreseeable future. We expect to continue to incur significant and increasing losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our planned research and development activities.

Previous wording

Since inception through March 31, 2025, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our initial public offering (“IPO”) in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and the $15.0 million upfront payment from Kaken received in April 2023. As of March 31, 2025, we had cash and cash equivalents of $25.6 million.

Current wording

Since inception through June 30, 2025, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our initial public offering (“IPO”) in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and the $15.0 million upfront payment from Kaken received in April 2023. As of June 30, 2025, we had cash and cash equivalents of $16.4 million.

Previous wording

advance clinical development of tildacerfont in MDD;

Current wording

advance clinical development of tildacerfont in major depressive disorder (“MDD”);

Previous wording

advance pre-clinical and clinical development of SPR202 in CAH;

Current wording

advance pre-clinical and clinical development of SPR202 in congenital adrenal hyperplasia (“CAH”);

Previous wording

As of March 31, 2025 and December 31, 2024, the outstanding principal was comprised of $1.4 million and $1.8 million, respectively, under the First Tranche. Repayment of principal under the First Tranche commenced in January 2023. Commitments available under the Second Tranche of $10.0 million expired on December 31, 2022.

Current wording

As of June 30, 2025 and December 31, 2024, the outstanding principal was comprised of $0.9 million and $1.8 million, respectively, under the First Tranche. Repayment of principal under the First Tranche commenced in January 2023. Commitments available under the Second Tranche of $10.0 million expired on December 31, 2022.

Previous wording

The final payment is due on the Maturity Date and includes all outstanding principal plus accrued unpaid interest and an end of term payment totaling $0.3 million, which is 6.0% of the original funded principal amount of the First Tranche (the “Supplemental Final Payment”). We may prepay amounts outstanding under the Term Loan at any time provided certain notification conditions are met, in which case, all outstanding principal plus accrued and unpaid interest, the Supplemental Final Payment, a prepayment fee of 1% or 2% of the principal amount of the First Tranche, and any bank expenses become due and payable.

Current wording

The final payment is due on the Maturity Date and includes all outstanding principal plus accrued unpaid interest and an end of term payment totaling $0.3 million, which is 6.0% of the original funded principal amount of the First Tranche (the “Supplemental Final Payment”). We may prepay amounts outstanding under the Term Loan at any time provided certain notification conditions are met, in which case, all outstanding principal plus accrued and unpaid interest, the Supplemental Final Payment, a prepayment fee of 1% of the principal amount of the First Tranche, and any bank expenses become due and payable.

Previous wording

To date, these expenses have been incurred primarily to advance tildacerfont and acquire TA-ERT. These expenses will primarily consist of personnel costs, expenses for the conduct of clinical trials, manufacturing costs for clinical drug supply, and in-process research and development. We expect that significant additional spending will be required to progress TA-ERT through clinical development and potential regulatory approval and advancing our other investigational product candidates through clinical and pre-clinical development.

Current wording

To date, these expenses have been incurred primarily to advance tildacerfont and acquire and develop TA-ERT. These expenses will primarily consist of personnel costs, expenses for the conduct of clinical trials, manufacturing costs for clinical drug supply, and in-process research and development. We expect that significant additional spending will be required to progress TA-ERT through clinical development and potential regulatory approval and advancing our other investigational product candidates through clinical and pre-clinical development.

Previous wording

General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation expense, for executive, finance, and other administrative functions. General and administrative expenses also include legal fees, professional fees, insurance costs, facility costs not otherwise included in research and development expenses, and public company expenses such as costs associated with compliance with the rules and regulations of the SEC, and those of the Nasdaq Stock Market LLC listing rules.

Current wording

General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation expense, for executive, finance, and other administrative functions. General and administrative expenses also include legal fees, professional fees, insurance costs, facility costs not otherwise included in research and development expenses, and public company expenses such as costs associated with compliance with the rules and regulations of the SEC, and those of the Nasdaq Stock Market LLC and OTC listing rules.

Previous wording

We expect that our general and administrative expenses will continue to increase in the foreseeable future as additional administrative personnel and services are required to manage these functions of a public company, and as we advance tildacerfont and TA-ERT through clinical development and potential regulatory approval.

Current wording

We expect that our general and administrative expenses will continue to increase in the foreseeable future as additional administrative personnel and services are required to manage these functions of a public company, and as we advance TA-ERT and tildacerfont through clinical development and potential regulatory approval.

Previous wording

Comparisons of the Three Months Ended March 31, 2025 and 2024

Current wording

Comparisons of the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

During the three months ended March 31, 2024, we recognized $2.0 million as collaboration revenue under the Kaken License Agreement. We did not recognize any collaboration revenue for the three months ended March 31, 2025.

Current wording

During the three and six months ended June 30, 2024, we recognized collaboration revenue of $1.6 million and $3.6 million, respectively. We did not recognize any collaboration revenue for the three and six months ended June 30, 2025.

Previous wording

Research and development expenses increased by $0.5 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase in clinical development expenses of $2.4 million was primarily related to the acquisition of SPR202 for $5.7 million, offset by decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $3.4 million. There was also a decrease in personnel related expenses of $1.5 million due to a decrease in headcount and stock-based compensation expense.

Current wording

Research and development expenses decreased by $8.5 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The decrease in clinical development expenses of $6.5 million was primarily related to decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $4.1 million, as well as a reduction in recorded liabilities of $3.3 million and an increase in receivables of $0.1 million associated with the Allievex Purchase Agreement, based on progressing Allievex bankruptcy proceedings. The decrease in manufacturing expenses of $0.7 million was primarily related to an increase in receivables of $0.6 million associated with the Allievex Purchase Agreement. There was also a decrease in personnel-related expenses of $1.3 million due to a decrease in headcount.

Previous wording

General and administrative expenses decreased by $0.7 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to a decrease in stock-based compensation expense of $0.6 million.

Current wording

General and administrative expenses decreased by $0.4 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to a decrease in stock-based compensation expense of $0.7 million, driven by fluctuations in the trading price of our common stock.

Previous wording

Interest expense was fairly consistent during the three months ended March 31, 2025 and 2024 and was related to the Term Loan.

Current wording

Interest expense was fairly consistent during the three and six months ended June 30, 2025 and was related to the Term Loan.

Previous wording

Interest and other income, net decreased by $0.6 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to a decrease in interest income of $0.8 million due to lower yield earned on money market fund balances offset by a gain from a decrease in the fair value of the warrant liability of $0.2 million.

Current wording

Interest and other income, net decreased by $0.3 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to a decrease in interest income of $0.7 million due to lower yield earned on money market fund balances, offset by a gain from a decrease in the fair value of the warrant liability of $0.5 million.

Previous wording

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We anticipate that we will continue to incur net losses for the foreseeable future. As of March 31, 2025 and December 31, 2024, we had an accumulated deficit of $264.3 million and $250.3 million, respectively. As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $25.6 million and $38.8 million, respectively. Since inception through March 31, 2025, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our IPO in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and $15.0 million from the Kaken upfront payment received in April 2023.

Current wording

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We anticipate that we will continue to incur net losses for the foreseeable future. As of June 30, 2025 and December 31, 2024, we had an accumulated deficit of $266.4 million and $250.3 million, respectively. As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $16.4 million and $38.8 million, respectively. Since inception through June 30, 2025, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our IPO in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and $15.0 million from the Kaken upfront payment received in April 2023.

Previous wording

To date, we have not generated any product revenue. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval and commercialize TA-ERT or any future product candidates, and we do not know when, or if at all, that will occur. We will continue to require additional capital to develop tildacerfont and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses related to our clinical development programs, and to a lesser extent, general and administrative expenses.

Current wording

To date, we have not generated any product revenue. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval and commercialize TA-ERT or any other current or future product candidates, and we do not know when, or if at all, that will occur. We will continue to require additional capital to develop TA-ERT and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses related to our clinical development programs, and to a lesser extent, general and administrative expenses.

Previous wording

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, tildacerfont or any of our future product candidates. We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to the clinical development and commercialization of TA-ERT and as we pursue regulatory approval of TA-ERT for the treatment of MPSIIIB. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and we may never succeed in achieving regulatory approval for TA-ERT in patients with MPSIIIB.

Current wording

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, TA-ERT or any of our other current or future product candidates. We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to the clinical development and commercialization of TA-ERT and as we pursue regulatory approval of TA-ERT for the treatment of MPSIIIB. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and we may never succeed in achieving regulatory approval for TA-ERT in patients with MPSIIIB.

Previous wording

the effects of the disruptions to and volatility in the credit and financial markets in the United States and worldwide from geopolitical and macroeconomic events, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, and the ongoing wars in Ukraine and Israel and related sanctions.

Current wording

the effects of the disruptions to and volatility in the credit and financial markets in the United States and worldwide from geopolitical and macroeconomic events, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, tariffs, and the ongoing wars in Ukraine and the Middle East and related sanctions.

Previous wording

We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from macroeconomic events, global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the wars in Ukraine and Israel and related sanctions, declines in economic growth, and uncertainty about economic stability. If the equity and credit markets continue to deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of our product candidates or other research and development initiatives. We also could be required to seek collaborators for our product candidates and any future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates and any future product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.

Current wording

We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from macroeconomic events, global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the wars in Ukraine and the Middle East and related sanctions, declines in economic growth, and uncertainty about economic stability. If the equity and credit markets continue to deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of our product candidates or other research and development initiatives. We also could be required to seek collaborators for our product candidates and any future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates and any future product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.

Previous wording

As of March 31, 2025, future payments of principal and interest on the Term Loan, which commenced repayment in January 2023 and matures in January 2026, were $1.4 million. For a description of the terms of the Loan Agreement, see the section titled “Material Agreements — Loan Agreement with Silicon Valley Bank” above.

Current wording

As of June 30, 2025, future payments of principal and interest on the Term Loan, which commenced repayment in January 2023 and matures in January 2026, were $1.0 million. For a description of the terms of the Loan Agreement, see the section titled “Material Agreements — Loan Agreement with Silicon Valley Bank” above.

Previous wording

As of March 31, 2025, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $1.1 million.

Current wording

As of June 30, 2025, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $1.0 million.

Previous wording

Net cash used in operating activities decreased by $2.2 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to lower payments driven by decreased clinical development activities offset by payments made for asset acquisitions of $5.9 million. For a description of the terms of our license and purchase agreements, see Note 7 to our unaudited condensed financial statements “License and Purchase Agreements” presented elsewhere in this Quarterly Report.

Current wording

Net cash used in operating activities decreased by $4.5 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to lower payments driven by decreased clinical development activities offset by payments made for asset acquisitions of $6.8 million. For a description of the terms of our license and purchase agreements, see Note 7 to our unaudited condensed financial statements “License and Purchase Agreements” presented elsewhere in this Quarterly Report.

Previous wording

For the three months ended March 31, 2025, net cash used in financing activities was $0.4 million, consisting primarily of principal payments on the Term Loan of $0.4 million.

Current wording

For the six months ended June 30, 2025, net cash used in financing activities was $0.8 million, consisting of principal payments on the Term Loan of $0.8 million.

Previous wording

For the three months ended March 31, 2024, net cash used in financing activities was $0.2 million, consisting primarily of principal payments on the Term Loan of $0.4 million, offset by proceeds of $0.2 million from stock option exercises.

Current wording

For the six months ended June 30, 2024, net cash used in financing activities was $0.6 million, consisting primarily of principal payments on the Term Loan of $0.8 million, offset by proceeds of $0.2 million from stock option exercises.

Previous wording

Our critical accounting estimates are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in the Annual Report. During the three months ended March 31, 2025, there were no changes to our critical accounting estimates from those discussed in the Annual Report.

Current wording

Our critical accounting estimates are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in the Annual Report. During the six months ended June 30, 2025, there were no changes to our critical accounting estimates from those discussed in the Annual Report.