SPRUCE BIOSCIENCES, INC.

Previous wording

Since our inception in November 2014, we have focused primarily on raising capital, establishing and protecting our intellectual property portfolio, organizing and staffing our company, business planning, and conducting preclinical and clinical development of, and manufacturing development for, our product candidate, tildacerfont. While tildacerfont remains in development, since November 2024 we have shifted our focus to the development of tralesinidase alfa (“TA-ERT”). We have no products approved for commercial sale and have not generated any product revenue to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of tildacerfont and any future product candidates.

Current wording

We have no products approved for commercial sale and have not generated any product revenue to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of tildacerfont and any future product candidates.

Previous 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.

Current wording

Since inception, we have incurred significant losses and negative cash flows from operations. During the nine months ended September 30, 2025 and 2024, we incurred net losses of $24.3 million and $29.5 million, respectively, and used $26.9 million and $35.3 million of cash in operations, respectively. As of September 30, 2025, we had an accumulated deficit of $274.6 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 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.

Current wording

Since inception through September 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 September 30, 2025, we had cash and cash equivalents of $10.7 million. In October 2025, the Company received gross proceeds of approximately $50.0 million from the sale of equity securities.

Previous wording

pursue regulatory approval of TA-ERT in patients with MPSIIIB;

Current wording

pursue regulatory approval of TA-ERT in patients with MPS IIIB;

Previous wording

expand manufacturing capacity to accommodate anticipated global demand of TA-ERT, if approved, for the treatment of MPSIIIB;

Current wording

expand manufacturing capacity to accommodate anticipated global demand of TA-ERT, if approved, for the treatment of MPS IIIB;

Previous wording

Global economic and business activities continue to face widespread macroeconomic uncertainties, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the ongoing wars in Ukraine and the Middle East and related sanctions, declines in economic growth, and uncertainty about economic stability.

Current wording

Global economic and business activities continue to face widespread macroeconomic uncertainties, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the ongoing wars in Ukraine and the Middle East and related sanctions, declines in economic growth, tariffs, the current U.S. government shutdown and uncertainty about economic stability.

Previous wording

We effected a one-for-seventy-five (1:75) reverse stock split of our outstanding common stock(the “Reverse Stock Split”).

Current wording

We effected a one-for-seventy-five (1:75) reverse stock split of our outstanding common stock (the “Reverse Stock Split”) on August 4, 2025.

Previous wording

In September 2019, we entered into a Loan and Security Agreement, as subsequently amended (the “Loan Agreement”), with Silicon Valley Bank (“SVB”) providing for a term loan (the “Term Loan”) for an aggregate principal amount of $4.5 million.

Current wording

In September 2019, we entered into a Loan and Security Agreement, as subsequently amended in March 2021 and May 2022 (the “Loan Agreement”), with Silicon Valley Bank (“SVB”) providing for a term loan (the “Term Loan”) for an aggregate principal amount of $5.0 million. The Term Loan will mature on January 1, 2026 (the “Maturity Date”).

Previous 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.

Current wording

As of September 30, 2025 and December 31, 2024, the outstanding principal was $0.5 million and $1.8 million, respectively.

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% of the principal amount of the First Tranche, and any bank expenses become due and payable.

Current wording

The Term Loan is subject to a floating per annum interest rate equal to the greater of (a) 0.50% above the Prime Rate (as defined in the Loan Agreement) or (b) 3.75%. 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 principal amount (the “Supplemental Final Payment”).

Previous wording

We will recognize royalty and milestone revenues under the Kaken License Agreement if and when appropriate under the relevant accounting rules (see Note 7 “License and Purchase Agreements — Kaken Pharmaceutical Co, Ltd.” to our financial statements). We have not generated any revenues from the commercial sale of approved products and we do not expect to generate revenues from the commercial sale of our product candidates for at least the foreseeable future, if ever.

Current wording

We will recognize royalty and milestone revenues under the Kaken License Agreement if and when appropriate under the relevant accounting rules (see Note 7 to our unaudited condensed financial statements “License and Purchase Agreements” presented elsewhere in this Quarterly Report). We have not generated any revenues from the commercial sale of approved products and we do not expect to generate revenues from the commercial sale of our product candidates for at least the foreseeable future, if ever.

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 and OTC 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 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 TA-ERT and tildacerfont 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 through potential regulatory approval.

Previous wording

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

Current wording

Comparisons of the Three and Nine Months Ended September 30, 2025 and 2024

Previous 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.

Current wording

During the three and nine months ended September 30, 2024, we recognized collaboration revenue of $0.6 million and $4.2 million, respectively. We did not recognize any collaboration revenue for the three and nine months ended September 30, 2025.

Previous 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.

Current wording

Research and development expenses decreased by $1.5 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The decrease in clinical development expenses of $2.2 million was primarily related to decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $3.4 million, offset by expenses for TA-ERT of $1.1 million. The increase in manufacturing expenses of $2.3 million was primarily related to expenses for TA-ERT of $2.6 million. There was also a decrease in personnel-related expenses of $1.5 million due to a decrease in headcount.

Previous wording

Research and development expenses decreased by $8.0 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The decrease in clinical development expenses of $4.1 million was primarily related to decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $7.6 million as well as a reduction in recorded liabilities of $3.4 million and an increase in receivables of $0.1 million associated with the Allievex Purchase Agreement, based on progressing Allievex bankruptcy proceedings, offset by the acquisition of SPR202 for $5.7 million. The decrease in manufacturing expenses of $0.9 million was primarily related to the discontinuation of the tildacerfont CAH development program and an increase in receivables of $0.6 million associated with the Allievex Purchase Agreement, offset by manufacturing expenditures of $0.4 million related to TA-ERT. There was also a decrease in personnel-related expenses of $2.8 million due to a decrease in headcount.

Current wording

Research and development expenses decreased by $9.5 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The decrease in clinical development expenses of $6.4 million was primarily related to decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $11.0 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, offset by the acquisition of SPR202 for $5.7 million and expenses for TA-ERT of $2.6 million. The increase in manufacturing expenses of $1.4 million was primarily related to manufacturing expenditures of $3.0 million related to TA-ERT, offset by an increase in receivables of $0.6 million associated with the Allievex Purchase Agreement and decreased manufacturing activities related to the discontinuation of the tildacerfont CAH development program of $0.9 million. There was also a decrease in personnel-related expenses of $4.3 million due to a decrease in headcount.

Previous 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.

Current wording

General and administrative expenses decreased by $0.2 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to a decrease in stock-based compensation expense of $0.3 million.

Previous wording

General and administrative expenses decreased by $1.1 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to a decrease in stock-based compensation expense of $1.2 million, driven by fluctuations in the trading price of our common stock.

Current wording

General and administrative expenses decreased by $1.3 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to a decrease in stock-based compensation expense of $1.5 million, offset by an increase in professional fees of $0.5 million primarily due to increased legal fees.

Previous wording

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

Current wording

Interest expense was fairly consistent during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Previous wording

Interest and other income, net decreased by $0.9 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to a decrease in interest income of $1.5 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 $0.6 million.

Current wording

Interest and other income, net decreased by $0.8 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to a decrease in interest income of $0.7 million due to lower yield earned on money market fund balances and a loss from an increase in the fair value of the warrant liability of $0.1 million.

Previous 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.

Current wording

Interest and other income, net decreased by $1.7 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to a decrease in interest income of $2.2 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 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.

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 September 30, 2025 and December 31, 2024, we had an accumulated deficit of $274.6 million and $250.3 million, respectively. As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $10.7 million and $38.8 million, respectively. Since inception through September 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

Until we can generate sufficient revenue, if ever, to fund our operations, we will need to finance future cash needs through public or private equity offerings, license agreements, debt financings or restructurings, collaborations, strategic alliances and marketing or distribution arrangements, and there can be no assurance that such arrangements will be available to us on a timely basis, or, if available, will be available on terms acceptable to us. Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of June 30, 2025 will be insufficient to fund our operations and debt obligations for at least 12 months following the issuance date of our financial statements included elsewhere in this Quarterly Report. These conditions raise substantial doubt about our ability to continue as a going concern.

Current wording

Until we can generate sufficient revenue, if ever, to fund our operations, we will need to finance future cash needs through public or private equity offerings, license agreements, debt financings or restructurings, collaborations, strategic alliances and marketing or distribution arrangements, and there can be no assurance that such arrangements will be available to us on a timely basis, or, if available, will be available on terms acceptable to us. Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of September 30, 2025 and proceeds from the October 2025 private placement financing will be insufficient to fund our operations and debt obligations for at least 12 months following the issuance date of our unaudited financial statements included elsewhere in this Quarterly Report. These conditions raise substantial doubt about our ability to continue as a going concern.

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, 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.

Current wording

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 MPS IIIB. 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 MPS IIIB.

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, tariffs, and the ongoing wars in Ukraine and the Middle East 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, the current U.S. government shutdown 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 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.

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, tariffs, the current U.S. government shutdown 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 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.

Current wording

As of September 30, 2025, future payments of principal and interest on the Term Loan, which commenced repayment in January 2023 and matures in January 2026, were $0.5 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 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.

Current wording

As of September 30, 2025, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $0.9 million.

Previous 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.

Current wording

Net cash used in operating activities decreased by $8.4 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to lower payments driven by decreased clinical development activities offset by payments made for asset acquisitions of $7.1 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 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.

Current wording

For the nine months ended September 30, 2025, net cash used in financing activities was $1.2 million, consisting primarily of principal payments on the Term Loan of $1.2 million.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash used in financing activities was $1.0 million, consisting primarily of principal payments on the Term Loan of $1.2 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 six months ended June 30, 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 nine months ended September 30, 2025, there were no changes to our critical accounting estimates from those discussed in the Annual Report.