Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis ofFinancial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q (the "Quarterly Report")and our audited financial statements and notes thereto and the related Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission ("SEC") on April 15, 2025 (the "Annual Report"). Unless otherwise indicated, all references in this Quarterly Report on Form 10-Q to "Spruce," the "company," "we," "our," "us" or similar terms refer to Spruce Biosciences, Inc.

Forward-Looking Statements

In addition to historical financial information, this Quarterly Report on Form 10-Q contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" under Part II, Item 1A below. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potentially," "predict," "should," "will" or the negative of these terms or other similar expressions.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Overview

We are a biopharmaceutical company focused on developing and commercializing novel therapies for neurological disorders with significant unmet medical need. We have a diverse portfolio of product candidates aimed at addressing diseases with high unmet medical need and clear biology for treatment, for which there are either no approved therapies treating the underlying disease or suboptimal treatment options. We were founded in April 2016 and are led by a management team experienced in the development and commercialization of groundbreaking therapeutics.

Since our inception in November 2014, we have focused primarily on raising capital, establishing and protecting our intellectual property portfolio, organizing and staffing our company, business planning, and conducting preclinical and clinical development of, and manufacturing development for, our product candidate, tildacerfont. While tildacerfont remains in development, since November 2024 we have shifted our focus to the development of tralesinidase alfa ("TA-ERT"), an investigational treatment for mucopolysaccharidoses type IIIB ("MPS IIIB"), or Sanfillipo Syndrome Type B. In October 2025, TA-ERT received breakthrough therapy designation from the U.S. Food and Drug Administration ("FDA") for the treatment of Sanfilippo Syndrome Type B. We anticipate submitting a biologics license application of TA-ERT for the treatment of Sanfilippo Syndrome Type B in the first quarter of 2026. Currently, there is no U.S. FDA-approved therapy for the treatment of MPS IIIB, and disease management consists of limited palliative care.

We have no products approved for commercial sale and have not generated any product revenue to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of tildacerfont and any future product candidates.

Since inception, we have incurred significant losses and negative cash flows from operations. During the nine months ended September 30, 2025 and 2024, we incurred net losses of $24.3 million and $29.5 million, respectively, and used $26.9 million and $35.3 million of cash in operations, respectively. As of September 30, 2025, we had an accumulated deficit of $274.6 million, and we do not expect positive cash flows from operations for the foreseeable future. We expect to continue to incur significant and increasing losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our planned research and development activities.

Since inception through September 30, 2025, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our initial public offering ("IPO") in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and the $15.0 million upfront payment from Kaken received in April 2023. As of September 30, 2025, we had cash and cash equivalents of $10.7 million. In October 2025, the Company received gross proceeds of approximately $50.0 million from the sale of equity securities.

Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of September 30, 2025 will be insufficient to fund our operations and debt obligations for at least 12

months following the issuance date of our financial statements included elsewhere in this Quarterly Report.

We expect our expenses will increase significantly in connection with our ongoing activities, as we:

Global economic and business activities continue to face widespread macroeconomic uncertainties, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the ongoing wars in Ukraine and the Middle East and related sanctions, declines in economic growth, tariffs, the current U.S. government shutdown and uncertainty about economic stability.

The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, which are uncertain and cannot be predicted; however, any continued or renewed disruption resulting from these factors could negatively impact our business.

Reverse Stock Split

We effected a one-for-seventy-five (1:75) reverse stock split of our outstanding common stock (the "Reverse Stock Split") on August 4, 2025.

All of the outstanding common stock share numbers (including shares of common stock subject to our options), share prices, exercise prices and per share amounts contained in the financial statements have been retroactively adjusted in the financial statements to reflect this Reverse Stock Split for all periods presented.

Material Agreements

Loan Agreement with Silicon Valley Bank

In September 2019, we entered into a Loan and Security Agreement, as subsequently amended in March 2021 and May 2022 (the "Loan Agreement"), with Silicon Valley Bank ("SVB") providing for a term loan (the "Term Loan") for an aggregate principal amount of $5.0 million. The Term Loan will mature on January 1, 2026 (the "Maturity Date").

As of September 30, 2025 and December 31, 2024, the outstanding principal was $0.5 million and $1.8 million, respectively.

The Term Loan is subject to a floating per annum interest rate equal to the greater of (a) 0.50% above the Prime Rate (as defined in the Loan Agreement) or (b) 3.75%. The final payment is due on the Maturity Date and includes all outstanding principal plus accrued unpaid interest and an end of term payment totaling $0.3 million, which is 6.0% of the principal amount (the "Supplemental Final Payment").

Components of Results of Operations

Collaboration Revenue

To date, all of our revenue has been derived from the Kaken License Agreement, pursuant to which we granted Kaken the exclusive right to develop and commercialize tildacerfont for CAH in Japan.

We will recognize royalty and milestone revenues under the Kaken License Agreement if and when appropriate under the relevant accounting rules (see Note 7 to our unaudited condensed financial statements "License and Purchase Agreements" presented

elsewhere in this Quarterly Report). We have not generated any revenues from the commercial sale of approved products and we do not expect to generate revenues from the commercial sale of our product candidates for at least the foreseeable future, if ever.

Operating Expenses

We classify operating expenses into two main categories: (i) research and development expenses and (ii) general and administrative expenses.

Research and Development Expenses

Our research and development expenses consist of external and internal expenses incurred in connection with our research activities and development programs.

These expenses include:

To date, these expenses have been incurred primarily to advance tildacerfont and acquire and develop TA-ERT. These expenses will primarily consist of personnel costs, expenses for the conduct of clinical trials, manufacturing costs for clinical drug supply, and in-process research and development. We expect that significant additional spending will be required to progress TA-ERT through clinical development and potential regulatory approval and advancing our other investigational product candidates through clinical and pre-clinical development.

Research and development expenses are recognized as they are incurred, including licenses of intellectual property that have no alternative future use at the time of the acquisition. If deposits are required by external vendors, a portion of the deposit is included as a prepaid expense until the activity has been performed or when the goods have been received to amortize the deposit to expense in the statements of operations and comprehensive loss.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation expense, for executive, finance, and other administrative functions. General and administrative expenses also include legal fees, professional fees, insurance costs, facility costs not otherwise included in research and development expenses, and public company expenses such as costs associated with compliance with the rules and regulations of the SEC, and those of the Nasdaq Stock Market LLC listing rules.

We expect that our general and administrative expenses will continue to increase in the foreseeable future as additional administrative personnel and services are required to manage these functions of a public company, and as we advance TA-ERT through potential regulatory approval.

Interest Expense

Interest expense consists of interest incurred and non-cash amortization of debt discount and issuance costs in connection with the Term Loan.

Interest and Other Income, Net

Interest and other income, net primarily consists of interest income earned on our cash and cash equivalents and the change in the fair value of the warrant liability.

Results of Operations

Comparisons of the Three and Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the periods presented (in thousands):

Collaboration Revenue

During the three and nine months ended September 30, 2024, we recognized collaboration revenue of $0.6 million and $4.2 million, respectively. We did not recognize any collaboration revenue for the three and nine months ended September 30, 2025.

Research and Development Expenses

The following table sets forth research and development expenses for the periods presented (in thousands):

Research and development expenses decreased by $1.5 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The decrease in clinical development expenses of $2.2 million was primarily related to decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $3.4 million, offset by expenses for TA-ERT of $1.1 million. The increase in manufacturing expenses of $2.3 million was primarily related to expenses for TA-ERT of $2.6 million. There was also a decrease in personnel-related expenses of $1.5 million due to a decrease in headcount.

Research and development expenses decreased by $9.5 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The decrease in clinical development expenses of $6.4 million was primarily related to decreased clinical development activities related to the discontinuation of the tildacerfont CAH development program of $11.0 million as well as a reduction in recorded liabilities of $3.3 million and an increase in receivables of $0.1 million associated with the Allievex Purchase Agreement, based on progressing Allievex bankruptcy proceedings, offset by the acquisition of SPR202 for $5.7 million and expenses for TA-ERT of $2.6 million. The increase in manufacturing expenses of $1.4 million was primarily related to manufacturing expenditures of $3.0 million related to TA-ERT, offset by an increase in receivables of $0.6 million associated with the Allievex Purchase Agreement and decreased manufacturing activities related to the discontinuation of the tildacerfont CAH development program of $0.9 million. There was also a decrease in personnel-related expenses of $4.3 million due to a decrease in headcount.

We anticipate that research and development expenses will increase into the foreseeable future as we advance TA-ERT through an anticipated biologics license application in the first quarter of 2026 and potential U.S. FDA approval.

For a description of the terms of our license and purchase agreements, see Note 7 to our unaudited condensed financial statements "License and Purchase Agreements" presented elsewhere in this Quarterly Report.

General and Administrative Expenses

General and administrative expenses decreased by $0.2 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to a decrease in stock-based compensation expense of $0.3 million.

General and administrative expenses decreased by $1.3 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to a decrease in stock-based compensation expense of $1.5 million, offset by an increase in professional fees of $0.5 million primarily due to increased legal fees.

Interest Expense

Interest expense was fairly consistent during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Interest expense decreased by $0.2 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to a decrease in the principal of the Term Loan.

Interest and Other Income, Net

Interest and other income, net decreased by $0.8 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to a decrease in interest income of $0.7 million due to lower yield earned on money market fund balances and a loss from an increase in the fair value of the warrant liability of $0.1 million.

Interest and other income, net decreased by $1.7 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to a decrease in interest income of $2.2 million due to lower yield earned on money market fund balances, offset by a gain from a decrease in the fair value of the warrant liability of $0.5 million.

Liquidity and Capital Resources

Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We anticipate that we will continue to incur net losses for the foreseeable future. As of September 30, 2025 and December 31, 2024, we had an accumulated deficit of $274.6 million and $250.3 million, respectively. As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $10.7 million and $38.8 million, respectively. Since inception through September 30, 2025, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our IPO in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and $15.0 million from the Kaken upfront payment received in April 2023.

On October 7, 2025, we entered into a Securities Purchase Agreement with certain institutional investors to sell and issue (i) 502,181 shares of common stock and (ii) pre-funded warrants to purchase up to 233,144 shares of common stock in a private placement transaction. The purchase price per share of common stock was $68.00 per share and the purchase price for the pre-funded warrants was $67.99. Our total gross proceeds were approximately $50.0 million, before deducting placement agent fees and other expenses.

Until we can generate sufficient revenue, if ever, to fund our operations, we will need to finance future cash needs through public or private equity offerings, license agreements, debt financings or restructurings, collaborations, strategic alliances and marketing or distribution arrangements, and there can be no assurance that such arrangements will be available to us on a timely basis, or, if available, will be available on terms acceptable to us. Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of September 30, 2025 and proceeds from the October 2025 private placement financing will be insufficient to fund our operations and debt obligations for at least 12 months following the issuance date of our unaudited financial statements included elsewhere in this Quarterly Report. These conditions raise substantial doubt about our ability to continue as a going concern.

Funding Requirements

To date, we have not generated any product revenue. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval and commercialize TA-ERT or any other current or future product candidates, and we do not know when, or if at all, that will occur. We will continue to require additional capital to develop TA-ERT and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses related to our clinical development programs, and to a lesser extent, general and administrative expenses.

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, TA-ERT or any of our other current or future product candidates.

We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to the clinical development and commercialization of TA-ERT and as we pursue regulatory approval of TA-ERT for the treatment of MPS IIIB. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and we may never succeed in achieving regulatory approval for TA-ERT in patients with MPS IIIB.

We may seek to raise capital through equity or debt financings, collaborative agreements, potentially including agreements to out-license rights to develop and commercialize TA-ERT, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

If we raise additional funds by issuing equity securities, our stockholders will experience dilution. If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from macroeconomic events, global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the wars in Ukraine and the Middle East and related sanctions, declines in economic growth, tariffs, the current U.S. government shutdown and uncertainty about economic stability. If the equity and credit markets continue to deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of our product candidates or other research and development initiatives. We also could be required to seek

collaborators for our product candidates and any future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates and any future product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.

The amount and timing of our future funding requirements will depend on many factors including the pace and results of our development efforts. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Material Cash Requirements

As of September 30, 2025, future payments of principal and interest on the Term Loan, which commenced repayment in January 2023 and matures in January 2026, were $0.5 million. For a description of the terms of the Loan Agreement, see the section titled "Material Agreements - Loan Agreement with Silicon Valley Bank" above.

As of September 30, 2025, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $0.9 million.

We enter into contracts in the normal course of business with third-party contract manufacturing organizations and CROs for clinical trials, non-clinical studies, drug substance and product manufacturing and other services for operating purposes. These contracts are generally cancelable by us upon prior written notice after a certain period. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

We have also entered into license and collaboration agreements under which we are obligated to make aggregate milestone payments upon the achievement of specified milestones as well as royalty payments. As of September 30, 2025, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For a description of the terms of our license and collaboration agreements, see Note 7 to our unaudited condensed financial statements "License and Purchase Agreements" presented elsewhere in this Quarterly Report.

Summary Statements of Cash Flows

The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for the periods presented below (in thousands):

Operating Activities

Net cash used in operating activities decreased by $8.4 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to lower payments driven by decreased clinical development activities offset by payments made for asset acquisitions of $7.1 million. For a description of the terms of our license and purchase agreements, see Note 7 to our unaudited condensed financial statements "License and Purchase Agreements" presented elsewhere in this Quarterly Report.

Financing Activities

For the nine months ended September 30, 2025, net cash used in financing activities was $1.2 million, consisting primarily of principal payments on the Term Loan of $1.2 million.

For the nine months ended September 30, 2024, net cash used in financing activities was $1.0 million, consisting primarily of principal payments on the Term Loan of $1.2 million, offset by proceeds of $0.2 million from stock option exercises.

Critical Accounting Estimates

Our condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, as well as the related disclosure of contingent assets and liabilities as of the date of the financial statements. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and

liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting estimates are described in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in the Annual Report. During the nine months ended September 30, 2025, there were no changes to our critical accounting estimates from those discussed in the Annual Report.

JOBS Act

We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). The JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use this extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We could be an emerging growth company until December 31, 2025, although circumstances could cause us to lose that status earlier, including if we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act or if we have total annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three year period before that time, we would cease to be an emerging growth company immediately.