On Wednesday, RBC (TSX:RY) Capital adjusted its outlook on Spruce Biosciences, Inc. (NASDAQ: SPRB), reducing the price target to $1.50 from the previous $2.00. The firm maintained its Sector Perform rating on the stock. According to InvestingPro data, the company maintains a strong balance sheet with more cash than debt, though it's currently burning through cash reserves at a concerning rate.
This adjustment follows the announcement of topline data from Spruce Biosciences' CAHmelia-204 study for tildacerfont in adult classic congenital adrenal hyperplasia (CAH). The study revealed that tildacerfont did not meet the primary efficacy endpoint.Want deeper insights? InvestingPro's comprehensive analysis reveals 10+ additional key metrics and insights for SPRB, available with a subscription.
The CAHmelia-204 study aimed to demonstrate an absolute reduction in daily glucocorticoid (GC) dosage after 24 weeks of treatment with tildacerfont. However, the results indicated only a 0.7 mg hydrocortisone-equivalent placebo-adjusted reduction in daily GC dose, which was not statistically significant. Despite high patient compliance with the drug, tildacerfont failed to meet the efficacy standards set against competitor treatments.
Spruce Biosciences also released data from the CAHptain-205 study, suggesting that higher dosing and twice-daily administration may be necessary to observe any efficacy in CAH treatment. Nonetheless, the company has decided to halt the development of tildacerfont. This strategic move is intended to preserve resources and explore alternative options.
Looking ahead, Spruce Biosciences is focusing on its ongoing research in major depressive disorder (MDD), with a Phase II trial expected to commence in the first quarter of 2025. The company is also open to potential business development activities to chart a path forward. While InvestingPro analysis shows the company maintains liquid assets exceeding short-term obligations, it remains unprofitable over the last twelve months with weak gross profit margins.
RBC Capital's revised price target reflects the recent developments and the continuation of a Sector Perform, Speculative Risk rating for Spruce Biosciences' shares.Discover the complete financial health analysis and detailed valuation metrics for SPRB in the exclusive Pro Research Report, available on InvestingPro.
In other recent news, Spruce Biosciences has faced significant developments, notably, the discontinuation of its clinical trials for tildacerfont due to unsatisfactory results. Oppenheimer and JMP Securities have consequently downgraded the company's stock from Outperform to Perform, and from Market Outperform to Market Perform, respectively.
Also noteworthy is the company's potential delisting from the Nasdaq Stock Market due to not meeting the minimum bid price requirement, although it has been granted an additional 180 days to comply. Despite these challenges, Oppenheimer maintained an Outperform rating in anticipation of key data releases from the company's Phase 2b trials. These recent developments are reshaping the future operations and financial health of Spruce Biosciences, as it navigates the impact of trial outcomes and seeks strategic alternatives.
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