Spruce Biosciences: Promising Strategy Amidst Financial Challenges and Regulatory Uncertainties

H.C. Wainwright analyst Ram Selvaraju has reiterated their neutral stance on SPRB stock, giving a Hold rating on April 23.

Ram Selvaraju has given his Hold rating due to a combination of factors surrounding Spruce Biosciences’ current situation. The company’s new strategy to focus on enzyme replacement therapy, specifically tralesinidase alfa for Sanfilippo Syndrome Type B, is promising. However, the financial constraints pose significant challenges. Spruce lacks the necessary capital to complete a Biologics License Application and sustain operations through the review period, which is a critical hurdle.
Additionally, while the FDA has provided guidance and confirmed the potential for accelerated approval based on surrogate biomarkers, the uncertainty around the Priority Review Voucher program adds another layer of risk. The company’s cash resources are only expected to last through 2025, and the adverse equity capital markets environment further complicates fundraising efforts. Moreover, the financial obligations to BioMarin, including milestone payments and royalties, add to the financial strain. These factors collectively contribute to the Hold rating, reflecting both the potential and the risks involved.

Selvaraju covers the Healthcare sector, focusing on stocks such as Axsome Therapeutics, Vanda, and Niagen Bioscience. According to TipRanks, Selvaraju has an average return of 0.0% and a 34.61% success rate on recommended stocks.