SVB Leerink cuts Spruce Biosciences to MP; PT to $5 from $35


SVB Leerink downgraded Spruce Biosciences (NASDAQ:SPRB) to “market perform” from “outperform” and slashed its price target to $5 from $35 after reviewing the company’s third quarter business update, speaking with the company and evaluating news flow prospects over the next 12-months.

Analyst Joseph Schwartz writes that Spruce’s potentially registrational Phase 2b trials for tildacerfont in congenital adrenal hyperplasia “have been delayed substantially and that members of the board will be overseeing execution while new leadership is secured.” 

Phase 2b data for the supportive trial called, study 203, in poor disease control patients has been pushed out to 2023, data for the potentially registrational trial called, study 204, in good disease control patients is to be determined, and an update on timing expectations will be provided in the coming months. 

According to the company, the delay is due to COVID-related disruptions. “We find this explanation for the lapse in execution equal parts understandable and perplexing, given times have certainly been challenging, but the studies were launched during the height of the pandemic and they were already designed to accommodate patients as much as possible,” Mr. Schwartz said. 

The company had initially planned to conduct studies in more than 70 sites, and while more than half of these sites are active, the company now believes that it will need to activate closer to 100 sites to enroll the requisite number of patients. “This delay pushes out important catalysts beyond the 12-month time horizon of our stock price target,” he added. 

Mr. Schwartz also noted that it is expected to take four-to-six months to replace CEO Richard King, who is leaving the company in order to retire.