Spruce's stock crashes as biotech lays off 5th of staff in wake of phase 2 hyperplasia fail

Spruce Biosciences' stock has shed three-quarters of its value in the wake of the failure of a phase 2 trial for the biotech's only drug candidate.

The CRF1 receptor antagonist tildacerfont was being investigated in the CAHmelia-203 trial of 96 adults with severe congenital adrenal hyperplasia (CAH), meaning they all had levels of a steroidal hormone called androstenedione over five times higher than normal.

The study failed to reach the primary efficacy endpoint of causing a reduction in androstenedione levels from baseline at Week 12. As a result, Spruce explained in an accompanying full-year earnings report that the trial is ending, and 21% of the workforce will be laid off to extend the biotech's cash runway through the end of 2025.

Spruce pointed to poor compliance with the treatment among patients as one possible reason for the clinical fail: “Compliance with study medication and glucocorticoids was low with approximately 50% of patients reporting 80% or greater compliance, resulting in lower-than-expected tildacerfont exposure,” the biotech said in a separate release.

These results “underscore the complexities inherent in managing a patient group with challenges related to androgenic control and glucocorticoid compliance,” endocrinologist Irina Bancos, M.D., the study’s principal investigator and an associate professor of medicine at the Mayo Clinic, said in Spruce’s release.

“Based on my clinical experience, patients within this group may face difficulties adhering to any therapeutic interventions, potentially impacting treatment outcomes,” Bancos said.

“CAHmelia-203 is the first study of its kind to address a difficult-to-treat CAH patient population with severe and more refractory hyperandrogenemia, which is often attributed to challenging real-life compliance with daily glucocorticoids,” Spruce CEO Javier Szwarcberg, M.D., said in the same release. “We garnered important data from this study which will inform ongoing development of tildacerfont in adult classic CAH.”

Szwarcberg was understandably keen to refocus attention onto another ongoing phase 2 trial, dubbed CAHmelia-204, which is assessing the ability of tildacerfont to reduce the use of glucocorticoids in adult CAH patients with close to normal levels of androstenedione.

Spruce described a reduction in glucocorticoid use as a “potentially registrational endpoint,” while Szwarcberg said the company is “eager” to read out top-line data from CAHmelia-204, which are expected in the third quarter of the year.

The biotech also tried to balance today’s fail with some better clinical news, announcing some “positive” preliminary data from the phase 2 CAHptain-205 trial in children that showed tildacerfont was not only safe but led to 73% of the 30 patients meeting the efficacy endpoint of either androstenedione or glucocorticoid reduction from baseline at Week 12.

“Assuming positive results from CAHmelia-204 and CAHptain-205, we plan to meet with the U.S. FDA and comparable foreign regulatory authorities in early 2025 to outline the design of a registrational clinical program in adult and pediatric classic CAH,” Szwarcberg said.

The promise of better results to come didn't appear to be enough to reassure investors, who sent Spruce’s stock plummeting 74% to $1.34 per share in premarket trading Thursday from a Wednesday closing price of $5.19.

CAH spans a group of genetic conditions that result in an enzyme deficiency that alters the production of adrenal hormones. Around 95% of cases are caused by a mutation that leads to a deficiency of the enzyme 21-hydroxylase, and there are currently no FDA-approved non-glucocorticoid treatments available.

Spruce’s loss could be Neurocrine Biosciences' gain, according to analysts at William Blair, who pointed out that the latter’s own CRF1 receptor antagonist crinecerfont demonstrated the ability to both reduce glucocorticoid use and androstenedione levels in phase 3 trials in adults and children last year.

Time is also on Neurocrine’s side as it prepares to submit an approval application in the second quarter of this year, while Spruce is not expecting to even begin discussions with the agency about pivotal trials until 2025. The William Blair analysts said they were “confident” that crinecerfont would secure approval, with a commercial launch penciled in for next year.