Spruce Biosciences Slashes Workforce, Shifts Focus to Rare Disease Asset

Spruce Biosciences, a San Francisco-based late-stage biopharma company, has announced a significant restructuring, including a 55% reduction in its workforce. This move comes as the company pivots its focus towards the development of a newly acquired rare disease therapy.

Massive Layoffs and Strategic Shift

In a recent SEC filing, Spruce Biosciences revealed plans to cut 55% of its staff, effective immediately with a termination date of May 2. This decision follows a previous workforce reduction of 21% in March 2024. The latest cuts are expected to leave the company with approximately 10 employees, down from 21 at the end of 2024.

The restructuring is part of Spruce's strategy to prioritize the development and potential accelerated approval of tralesinidase alfa enzyme replacement therapy (TA-ERT) for Sanfilippo syndrome type B (MPS IIIB). This rare genetic disorder, caused by an enzyme deficiency, has become the company's primary focus following the acquisition of TA-ERT from BioMarin on April 15.

Financial Challenges and Future Plans

Spruce Biosciences faces significant financial hurdles as it pursues its new direction. As of December 31, 2024, the company reported an accumulated deficit of $250.3 million and cash equivalents of $38.8 million. In its SEC filing, Spruce acknowledged that without alternative financing or proceeds from strategic alternatives, its current cash reserves would be insufficient to fund operations and debt obligations for at least the next 12 months.

Despite these challenges, Spruce aims to seek U.S. accelerated approval for TA-ERT, beginning with a new confirmatory trial. If successful in obtaining approval for its biologics license application (BLA), the company plans to establish a specialized commercial and medical affairs organization to support the therapy's commercialization.

Impact and Outlook

The workforce reduction is expected to result in cash charges of approximately $900,000, with most of these charges to be recorded in the second quarter. This restructuring marks a significant shift for Spruce Biosciences, which has faced setbacks in recent years, including the failure of its oral CRF1 antagonist tildacerfont in a trial for adult classic congenital adrenal hyperplasia.

As Spruce Biosciences navigates this transition, the pharmaceutical industry will be watching closely to see if the company's streamlined approach and focus on the rare disease market will yield success in the competitive biotech landscape.