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United States securities and exchange commission logo
September 3, 2020
Richard King
Chief Executive Officer
Spruce Biosciences, Inc.
2001 Junipero Serra Boulevard, Suite 640
Daly City, CA 94014
Re: Spruce Biosciences,
Inc.
Draft Registration
Statement on Form S-1
Submitted August 7,
2020
CIK No. 0001683553
Dear Mr. King:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Prospectus Summary, page 1
1. Please ensure that the
information you include in your summary is balanced. For
example, we note the
risk disclosure on pages 6 and 13 that you have a limited operating
history, have incurred
significant net losses since inception, anticipate that you will
continue to do so for
the foreseeable future and expect these losses to increase as you
continue clinical
development and seek regulatory approvals. Please provide a more
detailed and prominent
discussion of the most material risks you face.
2. On page 5, please
revise the table to disclose all remaining stages you must successfully
complete before you
could seek FDA approval. For example, please revise to reference
Phase 3 trials and any
estimated timetable. In this regard, we note your disclosure on
Richard King
FirstName LastNameRichard King
Spruce Biosciences, Inc.
Comapany 3,
September NameSpruce
2020 Biosciences, Inc.
September
Page 2 3, 2020 Page 2
FirstName LastName
pages 132 - 133 regarding Phase 1, Phase 2, and Phase 3 clinical
trials.
Risk Factors
Our amended and restated certificate of incorporation and amended and restated
bylaws will
provide that..., page 76
3. Please revise your disclosure on pages 76 and 185 regarding choice of
forum for
consistency. In particular, please revise the first sentence under
"Choice of Forum" on
page 185 to clarify that both your amended and restated bylaws and
amended and restated
certificate of incorporation include such provision, and similarly,
revise the second
paragraph of the risk factor to clarify that both documents provide
that the federal district
courts of the United States of America will be the exclusive forum for
resolving any
complaint asserting a cause of action arising under the Securities
Act.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
License Agreement with Eli Lilly and Company, page 92
4. You disclose on pages 92 and F-44 that in May 2016, you entered into a
License
Agreement with Lilly, which could require you to pay Lilly up to an
aggregate of $23.0
million upon the achievement of certain clinical and commercialization
milestones.
Please revise to describe such milestones in greater detail, including
how they will be
calculated and any timeframe, as applicable.
Loan Agreement, page 97
5. Please expand to provide more detailed disclosure of any material
financial covenants
contained in your Loan Agreement, including quantifying any ratios, as
applicable. If any
of such covenants could materially impact your ability to obtain
additional debt financing,
please revise your "Funding Requirements" disclosure on page 98 to
disclose the same,
and expand your risk factor disclosure as appropriate.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Critical Accounting Policies, Significant Judgments and Use of Estimates
Stock-Based Compensation Expense, page 103
6. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the IPO and the estimated offering price. This information will
help facilitate our
review of your accounting for equity issuances including stock-based
compensation.
Internal Control Over Financial Reporting, page 106
7. We note from your disclosures on page 71 that you identified a
material weakness in
internal control over financial reporting primarily related to a lack
of timely review over
the financial statement close process and you were unable to
adequately conduct review
Richard King
Spruce Biosciences, Inc.
September 3, 2020
Page 3
and analysis of certain routine transactions. Additionally you
disclose that the measures
you have taken to date may not be sufficient to remediate the material
weakness in your
internal control over financial reporting. Please revise to clarify
what remains to be
completed in your remediation plan, if anything. Also, if the material
weakness has not
been fully remediated, please revise to disclose how long you estimate
it will take to
complete your plan and disclose any material costs you have, or expect
to be, incurred.
General
8. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications. Please contact the staff
member associated
with the review of this submission to discuss how to submit the
materials, if any, to us for
our review.
You may contact Eric Atallah at 202-551-3663 or Angela Connell at
202-551-3426 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jessica Livingston at 202-551-3448 or David Lin at 202-551-3552 with
any other
questions.
FirstName LastNameRichard King Sincerely,
Comapany NameSpruce Biosciences, Inc.
Division of
Corporation Finance
September 3, 2020 Page 3 Office of Life
Sciences
FirstName LastName