SPRUCE BIOSCIENCES, INC.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”)and our audited financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on April 15, 2025 (the “Annual Report”). Unless otherwise indicated, all references in this Quarterly Report on Form 10-Q to “Spruce,” the “company,” “we,” “our,” “us” or similar terms refer to Spruce Biosciences, Inc.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and our audited financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 9, 2026 (the “Annual Report”). Unless otherwise indicated, all references in this Quarterly Report to “Spruce,” the “company,” “we,” “our,” “us” or similar terms refer to Spruce Biosciences, Inc.

Previous wording

In addition to historical financial information, this Quarterly Report on Form 10-Q contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will” or the negative of these terms or other similar expressions.

Current wording

In addition to historical financial information, this Quarterly Report contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will” or the negative of these terms or other similar expressions.

Previous wording

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Current wording

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

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”), an investigational treatment for mucopolysaccharidoses type IIIB (“MPS IIIB”), or Sanfillipo Syndrome Type B. In October 2025, TA-ERT received breakthrough therapy designation from the U.S. Food and Drug Administration (“FDA”) for the treatment of Sanfilippo Syndrome Type B. We anticipate submitting a biologics license application of TA-ERT for the treatment of Sanfilippo Syndrome Type B in the first quarter of 2026. Currently, there is no U.S. FDA-approved therapy for the treatment of MPS IIIB, and disease management consists of limited palliative care.

Current wording

Since inception, 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 candidates. Since November 2024 we have shifted our focus to the development of tralesinidase alfa enzyme replacement therapy (“TA-ERT”), an investigational treatment for mucopolysaccharidoses type IIIB (“MPS IIIB”), or Sanfilippo Syndrome Type B. In October 2025, TA-ERT received breakthrough therapy designation from the U.S. Food and Drug Administration (“FDA”) for the treatment of Sanfilippo Syndrome Type B. TA-ERT has received Rare Pediatric Disease Designation, Fast Track Designation, Breakthrough Therapy Designation, and Orphan Drug Designation in the United States and European Union (“EU”). We anticipate submitting a biologics license application of TA-ERT for the treatment of Sanfilippo Syndrome Type B in the fourth quarter of 2026. Currently, there is no FDA-approved therapy for the treatment of MPS IIIB, and disease management consists of limited palliative care.

Previous 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.

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 TA-ERT and our other current and future product candidates.

Previous 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.

Current wording

Since inception, we have incurred significant losses and negative cash flows from operations. During the three months ended March 31, 2026 and 2025, we incurred net losses of $12.3 million and $14.0 million, respectively, and used $8.7 million and $12.7 million of cash in operations, respectively. As of March 31, 2026, we had an accumulated deficit of $301.5 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 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.

Current wording

Since inception through the date of this filing, we have raised aggregate gross proceeds of $427.1 million, including $103.5 million from our initial public offering in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $103.6 million from private placement financings, $69.0 million from the April 2026 underwritten public offering, $20.0 million from the issuance of debt, and $15.0 million upfront payment from Kaken Pharmaceutical Co., Ltd. received in April 2023. As of March 31, 2026, we had cash and cash equivalents of $54.1 million.

Previous wording

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 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.

Current wording

We believe that based on our current operating plan, our cash and cash equivalents of $54.1 million as of March 31, 2026 and the net proceeds from our April 2026 underwritten public offering of common stock and pre-funded warrants will be sufficient to fund our planned operations and debt obligations for at least 12 months following the issuance date of these financial statements included elsewhere in this Quarterly Report.

Previous wording

advance TA-ERT through a planned confirmatory study in patients with MPSIIB and expanded access programs;

Current wording

advance TA-ERT through a planned confirmatory study in patients with MPS IIIB and expanded access programs;

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, tariffs, the current U.S. government shutdown 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 and related legal challenges, and uncertainty about economic stability.

Previous 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.

Current wording

To date, these expenses have been incurred primarily to develop TA-ERT. We expect that 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

Interest expense consists of interest incurred and non-cash amortization of debt discount and issuance costs in connection with the Term Loan.

Current wording

Interest expense consists of interest incurred and non-cash amortization of debt discount and issuance costs in connection with our debt.

Previous wording

Interest and other income, net primarily consists of interest income earned on our cash and cash equivalents and the change in the fair value of the warrant liability.

Current wording

Interest and other income, net primarily consists of interest income earned on our cash and cash equivalents.

Previous wording

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

Current wording

Comparisons of the Three Months Ended March 31, 2026 and 2025

Previous 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.

Current wording

Research and development expenses decreased by $3.3 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease in clinical development expenses of $3.9 million was primarily related to lower acquisition related costs of $5.7 million, the discontinuation of the tildacerfont CAH development program of $1.9 million, offset by increased expenses for TA-ERT of $3.7 million. The increase in manufacturing expenses of $1.1 million was primarily related to TA-ERT.

Previous wording

We anticipate that research and development expenses will increase into the foreseeable future as we advance TA-ERT through an anticipated biologics license application in the first quarter of 2026 and potential U.S. FDA approval.

Current wording

We anticipate that research and development expenses will increase into the foreseeable future as we advance TA-ERT through an anticipated biologics license application submission in the fourth quarter of 2026 and potential FDA approval.

Previous 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.

Current wording

General and administrative expenses increased by $0.8 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an increase in professional fees of $0.5 million and an increase in personnel related costs of $0.2 million.

Previous 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.

Current wording

Interest and other income, net increased by $0.2 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher yield earned on money market fund balances.

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 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.

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 March 31, 2026 and December 31, 2025, we had an accumulated deficit of $301.5 million and $289.2 million, respectively. As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $54.1 million and $48.9 million, respectively.

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 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.

Current wording

Until we can generate sufficient revenue, if ever, to fund our operations, we will need to finance future cash needs through the sale of a priority review voucher, if received, 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.

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 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.

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 and launch 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

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.

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 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

We may seek to raise capital through equity or debt financings, collaborative agreements, potentially including agreements to out-license rights to develop and commercialize TA-ERT, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

Current wording

We may seek to raise capital through the sale of a priority review voucher, if received, equity or debt financings, collaborative agreements, potentially including agreements to out-license rights to develop and commercialize TA-ERT, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

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, the current U.S. government shutdown 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 and related legal challenges, 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, 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.

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 and related legal challenges, 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 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.

Current wording

As of March 31, 2026, future payments of principal and interest on the Avenue Loans, which matures in July 2029, were $20.4 million. For a description of the terms of the Avenue Loans, see the section titled “Material Agreements — Loan Agreement with Avenue” above.

Previous 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.

Current wording

As of March 31, 2026, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $0.7 million.

Previous wording

We enter into contracts in the normal course of business with third-party contract manufacturing organizations and CROs for clinical trials, non-clinical studies, drug substance and product manufacturing and other services for operating purposes. These contracts are generally cancelable by us upon prior written notice after a certain period. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

Current wording

We enter into contracts in the normal course of business with third-party contract manufacturing organizations and CROs for clinical trials, non-clinical studies, drug substance and product manufacturing and other services for operating purposes. These contracts are generally cancelable by us upon prior written notice after a certain period, except for certain contracts with contract manufacturing organizations containing minimum purchase obligations. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

Previous wording

We have also entered into license and collaboration agreements under which we are obligated to make aggregate milestone payments upon the achievement of specified milestones as well as royalty payments. As of September 30, 2025, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For a description of the terms of our license and collaboration agreements, see Note 7 to our unaudited condensed financial statements “License and Purchase Agreements” presented elsewhere in this Quarterly Report.

Current wording

We have also entered into license and collaboration agreements under which we are obligated to make aggregate milestone payments upon the achievement of specified milestones as well as royalty payments. As of March 31, 2026, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For a description of the terms of our license and collaboration agreements, see Note 7 to our unaudited condensed financial statements “License Agreements” presented elsewhere in this Quarterly Report.

Previous 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.

Current wording

For the three months ended March 31, 2026, net cash provided by financing activities was $13.9 million, consisting primarily of net proceeds from the Avenue Loans of $14.0 million.

Previous 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.

Current 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 debt of $0.4 million.

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 nine months ended September 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 three months ended March 31, 2026, there were no changes to our critical accounting estimates from those discussed in the Annual Report.