On Thursday, RBC (TSX:RY) Capital adjusted its stance on Spruce Biosciences, Inc. (NASDAQ:SPRB), downgrading the stock from Outperform to Sector Perform and slashing the price target to $2 from the previous $9. The decision follows the announcement that Spruce Biosciences' lead drug candidate, tildacerfont, did not meet the primary endpoint in the CAHmelia-203 trial.
The drug aimed to reduce androgen levels in adults with classic congenital adrenal hyperplasia, a rare endocrine disorder, but failed to show statistical significance in reducing the hormone at the 12-week mark.
The clinical trial results revealed only a 2.6% reduction in androgen levels with the 200 mg once-daily dose of tildacerfont, falling short of the anticipated 40% reduction. The lack of a dose response and challenges posed by low patient compliance, leading to reduced drug exposure, further complicated the data. Despite the drug's good tolerability, the efficacy and clinical profile of tildacerfont now face scrutiny.
Management at Spruce Biosciences has indicated that they are looking forward to the CAHmelia-204 trial results expected in the third quarter and are considering strategic dosing options. They are also planning new pivotal trials with the 204 and 205 data. However, RBC Capital notes that even with positive data from the upcoming trial, a deeper understanding of tildacerfont and patient responses will be necessary to determine future steps.
Amid these developments, Spruce Biosciences has reported its financial results for the fiscal year 2023, including a cost reduction strategy that aims to reduce full-time employee count by 21% to extend its cash runway to the end of 2025. The downgrade to Sector Perform with a Speculative Risk rating by RBC Capital reflects the uncertainty surrounding the drug's development timeline and the company's shift in strategy following the trial's outcome.
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